There's one number that tells you how long your business can survive if nothing changes. Most owners can't tell you what it is off the top of their head. It's called your runway.
Runway is simple: how many months of cash you have left at your current rate of spending. To find it you need two things. Your cash in the bank, and your burn rate.
Burn rate is how much cash you're going through each month. And there are two versions worth knowing.
Gross burn is everything going out: salaries, rent, suppliers, tax, software. Net burn is that minus the cash actually coming in.
Let's make it real.
You have £120,000 in the bank.
Each month, £60,000 goes out and £45,000 comes in.
So your net burn is £15,000 a month.
Runway is cash divided by burn. £120,000 divided by £15,000.
Eight months. That's how long you've got before the cash runs out, if nothing changes.
Here's the point. Runway turns a vague worry into a countdown you can act on. Eight months is very different from three. It tells you whether you're hiring or holding, whether that new tool waits, whether you chase that slow-paying client today.
And notice: you can improve runway from both ends. Collect cash faster and net burn falls. Trim spend and it falls again. Every week you shave off your debtor days buys you time.
So know your number. Cash in the bank, net burn, runway. Check it monthly, the same way you check your P&L.
Because profit is a story about the year. Runway is a story about right now.