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You’re Not Calculating Your Startup’s Burn Rate Correctly
You’re supposed to know what your burn rate is as a startup CEO. From my experience working with startup CEOs, too many startup CEOs don’t know their burn rate, or they’re not properly calculating their burn rate.
The problem is not knowing how to calculate your burn rate can literally cost you your company. And I don’t want that to happen to you.
Why your burn rate is so important.
There are certain numbers you need to know at all times, and one of them is your burn rate. If you don’t know your burn rate, you can run out of money sooner than you expected. And, on the other hand, you could not hire people that are critical to your success because you thought you couldn’t afford them.
What is your burn rate is one of the questions that just about every investor will ask you. And investors expect you to instantly know what your burn rate is. So, you can see, on many levels, that burn rate is pretty important.
What your burn rate isn’t.
The mind blowing thing to me is too many startup CEOs think their burn rate is the amount of money they are spending in any given period of time. That’s not it.
