Every startup founder in Nigeria knows this fear: How many months can we survive on current cash?
That fear turns into strategy when you can measure your burn rate and estimate your runway. With Zaccheus, you get automated insights and alerts, so you don’t wait until it’s too late.
In this article, you’ll learn how the startup runway calculator works, how to read what Zaccheus is telling you, and what steps to take when alerts go off.
2. What Are Burn Rate and Runway and Why They Matter
-
Burn rate is how fast your startup is spending money (your cash outflows) over time.
-
Runway is how long you can keep operating before your cash runs out, assuming your burn rate stays constant.
These two metrics are essential financial signals for any early-stage business. If your burn is too high relative to your runway, you risk running out of cash before reaching sustainability or raising the next round.
Burn rate and runway are frequently used in startup finance guides.
In the context of Nigerian startups, your cash flows may be more volatile (currency risk, delays in payments, cost inflation), so monitoring runway is even more critical. (As noted by PlanetWeb’s guide to burn rate in Nigeria)
3. How to Calculate Burn Rate (Gross vs Net)
There are two main types of burn rate:
3.1 Gross Burn Rate
This is simpler: your total monthly expenses (cash outflows), not accounting for revenues.
Formula:
Gross Burn Rate = Total Monthly Operating Costs
This includes salaries, rent, subscriptions, marketing, utilities, etc.
3.2 Net Burn Rate
This is more informative: expenses minus revenue (i.e. how much net cash you’re losing each month).
Formula:
Net Burn Rate = Total Monthly Expenses − Total Monthly Revenue
Or, alternatively, by looking at cash balances:
Net Burn = (Cash at start of period – Cash at end of period) ÷ Number of months
Example (Nigeria context):
If your startup spends ₦5,000,000 monthly but brings in ₦2,000,000 in revenue, your gross burn is ₦5,000,000 and your net burn is ₦3,000,000.
The net burn is what matters most for runway calculation.
4. How to Compute Runway (Months Left)
Once you know your burn rate (net burn is preferred), you can calculate your runway:
Formula:
Runway (in months) = Cash Balance ÷ Net Burn Rate
Example:
If your startup has ₦30,000,000 in cash, and your net burn is ₦3,000,000 per month, then:
Runway = 30,000,000 ÷ 3,000,000 = 10 months
That tells you: at current spending and revenue levels, you have 10 months to either become more efficient, increase revenue sharply, or raise new capital before you run out of funds.
Using averages or trends (e.g., 3-month average burn) can smooth out month-to-month fluctuations.
5. Why Using a Startup Runway Calculator in Nigeria Matters
-
Volatility & fluctuations: Nigerian startups often face currency devaluation, delays in payments, inflation, and unpredictable costs. A static forecast can mislead unless you update it regularly.
-
Investor expectations: Investors will always ask your runway. A calculator gives you real-time confidence when negotiating.
-
Early warning: If your runway is shrinking, you want alerts before you hit zero.
-
Scenario planning: You can simulate what happens if burn increases, revenue slows, or a cost cuts in half, then see the impact on runway instantly.
That’s where Zaccheus adds real value: it integrates with your financials, tracks your burn and runway live, and sends contextual alerts when thresholds are approached.
6. How Zaccheus Tracks & Sends Burn/Runway Alerts
(Here, you may need to adapt to your actual product’s features, this is a template.)
6.1 Data aggregation
Zaccheus connects to your bank accounts, accounting software, and transaction feeds to continuously update your cash balance, revenue streams, and expense lines.
6.2 Burn & runway engine
Zaccheus calculates net burn (and optionally gross burn) over configurable periods (monthly, 3-month average) and divides your cash to compute runway in months. The Zaccheus Startup Runway Calculator helps you monitor cash flow.
6.3 Alert thresholds
You (or your finance admin) can set thresholds such as:
-
Runway < 6 months → warning
-
Runway < 3 months → critical
-
Burn spike > +30% vs baseline → alert
-
Unexpected large expense > threshold → alert
When an alert fires, Zaccheus will notify you (via email, mobile push, dashboard) with context and suggested actions.
6.4 Trend & projection graphs
Your dashboard shows a burn trend line, runway projection curve, “what-if” scenario toggles (e.g. “if burn increases 20 %,” “if revenue drops 10 %”) so you can see how actions affect runway.
7. How to Interpret Zaccheus Alerts and What Each Means
Here are common alert types you may see and how to interpret them:
| Alert Type | What It Means | What to Check / Do |
|---|---|---|
| Runway under threshold | Your runway has dropped below your safe limit (e.g. 6 or 3 months) | Review burn drivers, cut discretionary spend, postpone hiring, boost revenue |
| Burn spike | Your net burn has jumped unexpectedly (due to a cost or drop in revenue) | Identify the source (one-off cost? vendor price change? revenue dip?) |
| Cash drop shock | A large withdrawal or expense reduced cash suddenly | Confirm the transaction, ensure it’s planned and accounted for |
| Revenue shortfall | Revenue is lower than forecast, raising net burn | Check sales pipeline, accounts receivable, and expected inflows |
| Scenario alert | If you continue at current trend, your runway will hit danger zone soon | Use scenario module to test mitigations |
When you receive an alert, don’t panic. Use it as a signal to dig deeper, forecasts are not destiny.
8. What to Do When Your Runway Is Shrinking
When your runway starts compressing, you need action. Here are priority steps:
-
Triage expenses
Cut nonessential expenses first (subscriptions, travel, marketing trials).
Pause or defer large capital outlays.
Negotiate vendor contracts or terms with suppliers. -
Optimize revenue / cash inflow
Accelerate receivables, offer discounts for early payment, push sales incentives.
Launch higher-margin products or upsells.
Consider bridging sales deals or prepay contracts. -
Adjust headcount or structure
Freeze noncritical hiring.
Evaluate roles and cut redundancies.
Switch full-time roles to contractors if feasible. -
Raise funding proactively
When you still have months of runway, begin outreach to investors.
Use your runway metric to justify the valuation or raise amount.
Don’t wait until you’re desperate. -
Run scenario planning
Use Zaccheus’s “what-if” simulator: “What if burn increases 20 %?” or “What if I cut burn by 30 %?”
See the impact on runway and pick the least painful adjustments. -
Update your forecast regularly
Runway is not static. Recompute weekly or monthly as new data flows in.
Set conservative buffers (e.g. assume 10-15% more burn than baseline).
9. Best Practices: Extending Runway & Optimizing Burn
-
Target 12–18 months of runway as a buffer. (Many experts suggest this window for resilience), Use moving averages (3 or 6 months) rather than one-month spikes for smoother burn projections.
-
Break down burn by category (fixed vs variable) and monitor high-growth categories carefully.
-
Build scenario “stress tests” (e.g. in worst-case revenue drop) and keep a contingency plan.
-
Use conservative assumptions for forecasts (don’t assume best-case growth).
-
Align your spending with milestone-based goals only increase spend when you’re confident in traction.
-
Keep stakeholders and investors informed of your runway and burn metrics (transparency builds trust).
10. Summary & Next Steps
In Nigeria’s dynamic startup environment, measuring your burn and runway is nonnegotiable. The startup runway calculator approach gives you clarity and confidence. With Zaccheus, you don’t manually compute these metrics, you get real-time updates, alerts, and tools to simulate decisions.
When an alert triggers, respond methodically: identify the root cause, cut fat, boost inflow, and reforecast. The goal is not just survival, but strategic stability so you execute your vision without being cash-strapped.
If you want to see how Zaccheus integrates with your specific accounting stack, or want to build a custom alert rule for your startup, I can help you design that next.
Start by checking your current burn and runway now, run your first “what-if” scenario, and let Zaccheus alert you before you hit a crisis.
11. FAQ
Q1. Why use net burn instead of gross burn to compute runway?
Net burn gives the actual cash loss after factoring revenue. It shows how fast you are really burning capital. Gross burn only gives how much you spend in total.
Q2. Is 6 months of runway enough?
Six months is borderline. Many investors and best practices suggest aiming for 12–18 months of runway to allow time for growth or fundraising.
Q3. How often should I recalculate runway?
At least monthly. In volatile periods, weekly is better. Use moving averages and trend-based recalculation.
Q4. What if my revenue is unpredictable?
Use conservative revenue forecasts (e.g. 70-80% of target) and test “downsides” via scenario planning. Always build a buffer.
Q5. Can Zaccheus alert me about burn turning negative (i.e. becoming profitable)?
Yes, you can configure alerts both ways. If net burn becomes zero or negative, Zaccheus can notify you that you’re cash-flow positive.
Every founder using a runway calculator for Nigerian startups should know how Zaccheus alerts work.