What is cash runway?
Cash runway: How many weeks your cash lasts if more money keeps going out than coming in: cash / weekly shortfall.
Runway in weeks = cash now / (money out - money in per week)
Example
The gym has $9,000 and its cash falls by $600 a week: $9,000 / $600 = 15 weeks. It must change something before the 15 weeks are over, not after.
Made-up people and numbers from the cases of our course; the math is real.
A common mistake
Dividing by all the money out. A shop with $6,000, $3,000 in and $3,750 out a week has $6,000 / $750 = 8 weeks, not $6,000 / $3,750 = 1.6.
Try it with your own numbers: Cash runway calculator (free, no sign-up).
Practise this in block 1
Block 1 of Ownwise is free, with no account needed to start: short lessons on costs, margin and break-even, then a made-up case where you make the decisions. This term has its own lessons in block 3, part of the paid practice pack.