Burn rate

How much cash your business consumes each month over and above what comes in.

What it means

Gross burn is everything going out per month. Net burn is that minus what comes in — the figure that actually matters, because it is what depletes the bank.

A business at break-even has a net burn of zero. A profitable one has a negative burn, which nobody says out loud.

Why it matters

Combined with your cash balance it gives you runway, and runway is time. Time is the thing you are actually managing when a business is not yet profitable.

What it looks like in practice

Track it as a rolling three-month average — a single month with an annual insurance payment in it is not a trend.

The controllable parts, in the order they usually matter: headcount, premises, software, and marketing spend that has not been measured.

What to watch out for

A burn rate that rises quietly with headcount. Each hire adds employer's National Insurance, pension contributions, equipment and often software seats — commonly 20–30% on top of salary.

"We'll grow into it." Sometimes true, and the plan needs to say by when and what happens if not.

Where to get proper advice

An accountant producing monthly management accounts will report this without being asked, if you ask them to include it once.