You’re landing clients. Revenue is rolling in. Business looks healthy on the surface. So why does your bank account feel like it’s shrinking?
Enter the most misunderstood financial metric in small business: Burn Rate.
It might sound like something reserved for high-growth startups, but in reality, every SME should be tracking it—closely. Burn rate gives you the clearest picture of how fast you’re spending money, and whether your current strategy is sustainable.
Let’s break down what burn rate really means, why it’s more important than you think, and how Finoya makes tracking it effortless.
What Is Burn Rate?
Burn rate is the amount of money your business is spending each month to cover operating costs. Think salaries, rent, tools, subscriptions, marketing—everything it takes to keep the lights on.
If your business isn’t profitable yet (or you’re reinvesting profits aggressively), you’re likely burning cash each month. Your burn rate tells you how quickly that’s happening.
There are two types:
Gross Burn Rate – Your total monthly expenses
Net Burn Rate – Your monthly expenses minus your monthly income (i.e., how much cash you’re actually losing)
Why It Matters (A Lot)
1. It Shows You How Long You Can Survive
Knowing your burn rate tells you how many months of cash you have left—your runway. If your burn rate is $10,000/month and you have $60,000 in the bank, you’ve got 6 months to turn things around or raise more money.
2. It Keeps You From Overcommitting
Thinking about hiring? Expanding? Launching a new product? Burn rate tells you if that’s actually feasible—or if you’re about to overextend.
3. It Helps You Plan for Growth
Burning cash isn’t always bad. If you’re investing in growth, it can be strategic. But you need to know how fast the fire is burning and what the payoff timeline looks like.
4. It Can Be a Red Flag (Or a Green Light)
A high burn rate without clear ROI? Time to cut costs or rethink strategy. A stable burn rate paired with strong revenue growth? You’re likely on track.
Most SMEs Don’t Track It—Until It’s Too Late
A lot of business owners wait until cash is tight before they start paying attention. But by then, it’s often too late. That’s why tracking burn rate in real time is so powerful.
The earlier you spot a problem, the easier it is to fix.
How to Calculate Your Burn Rate
You don’t need to overcomplicate it.
Gross Burn Rate = Total monthly operating expenses
Net Burn Rate = Total monthly expenses – Total monthly revenue
Example:
You spend $25,000/month on expenses
You make $18,000/month in revenue
Your net burn rate = $7,000
That means you’re losing $7,000 in cash per month.
Now ask: how long can you afford that pace?
How Finoya Makes This Easier (And Smarter)
Instead of crunching numbers manually, Finoya connects to your accounting platform and automatically tracks your burn rate every month.
Even better: it puts your burn rate in context. You’ll see how it affects your runway, your KPIs, and your future decisions. You can:
Set alerts when burn rate crosses a certain threshold
Track month-over-month changes
See trends tied to team growth, ad spend, or seasonal shifts
Ask Noya the Smart Questions
Noya, Finoya’s AI assistant, makes it even easier to understand your burn rate. You can ask:
“What’s my current monthly burn?”
“How has it changed over the last 3 months?”
“What happens to my runway if I increase salaries by 10%?”
No need to dig through spreadsheets or build a financial model. Noya gives you fast, data-backed answers in plain English.
What’s a Healthy Burn Rate?
That depends on your business type, growth stage, and goals. A bootstrapped consultancy might need to keep burn low and focus on profitability. A product startup might be okay burning more to fund development and acquisition.
In general, aim for a burn rate that gives you at least 6 months of runway. Anything less, and you’re walking a tightrope.
Burn Rate vs Profitability
These two get confused a lot.
Profitability tells you whether your revenue exceeds your expenses
Burn rate tells you how fast your cash is going down
A business can be profitable but still have a high burn rate if cash is tied up elsewhere (inventory, accounts receivable). That’s why tracking both is critical.
Don’t Wait for a Cash Crunch
The smartest founders don’t wait for problems to show up in their bank account. They watch burn rate like a hawk. They know their numbers. They ask better questions. And they plan smarter.
That’s what Finoya was built for.
Whether you’re hiring, expanding, or just trying to stay lean, Finoya helps you track your burn rate, understand your financial health, and make decisions backed by real data.
Sign up for a 7-day free trial at Finoya.ai and see how easy it is to stay ahead of your cash flow.