Startups
Net burn per month
The amount drawn from the bank each month. Use cash collected, not invoiced, and include every outflow line including payroll taxes and benefits.
The Formula
Net Burn = Monthly Expenses - Monthly Revenue
The amount drawn from the bank each month. Use cash collected, not invoiced, and include every outflow line including payroll taxes and benefits.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| E | Total monthly expenses | currency per month | Everything leaving the account: payroll, rent, software, contractors, hosting, marketing and tax instalments. 90,000 in the default example. |
| R | Monthly revenue collected | currency per month | Cash that actually arrived during the month. 40,000 in the default example, even if more was invoiced. |
| B(net) | Net burn per month | currency per month | 90,000 minus 40,000 equals 50,000 per month. Zero means break-even; negative means cash is growing. |
What Each Symbol Means
Ecurrency per month
Total monthly expenses
Everything leaving the account: payroll, rent, software, contractors, hosting, marketing and tax instalments. 90,000 in the default example.
Rcurrency per month
Monthly revenue collected
Cash that actually arrived during the month. 40,000 in the default example, even if more was invoiced.
B(net)currency per month
Net burn per month
90,000 minus 40,000 equals 50,000 per month. Zero means break-even; negative means cash is growing.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate burn rate page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Burn Rate, filed under Business. Every number the guide produces comes from substituting into this one line.