why one number lies
The flattering version is the dangerous one.
Ask for your runway and most tools hand back one number, computed on the kindest assumption: that next month looks like last month. That is the version that gets founders into trouble, because the months when runway matters are exactly the months that stop looking like last month.
The honest version runs the same arithmetic three ways: revenue holds, revenue drops by a fifth, revenue stops. The third is not a prediction: call it what it is, a stress test. For a service business especially: income rarely stops all at once, it fails one client at a time, which is why the middle floor is the one worth staring at.
how much is enough
The published advice disagrees. Say so.
Small-business guides commonly say hold three to six months of costs; startup advice written for funded companies talks in twelve to eighteen. Both are defensible for the readers they were written for, and neither knows your business. What settles it for you is the middle floor above: if losing a fifth of your income leaves you under six months, cash is your project this quarter. That is our stance, not a law.
This page is the runway math. The broader monthly check (margin, cash, and whether you pay yourself properly) lives at is my business actually fine?
two moves
Compute your three floors with real numbers now.
If the middle floor reads under six months, pick one cost to cut this week and run the numbers again. Watching the date move is what turns an anxiety into a plan.
Re-run it on the first of every month.
One reading is a snapshot; the trend is the real number. Three months of the middle floor moving the right way is worth more than any single comfortable reading.
straight answers
The questions founders ask about this.
How do I calculate my business runway?
Divide the cash in your bank by the gap between what leaves and what reliably comes in each month: that is your runway if nothing changes. If more comes in than leaves, your runway is not a number, it is a direction. The honest version runs it three ways: income holds, drops by a fifth, stops.
How many months of cash should a small business keep?
Published advice disagrees: small-business guides commonly say three to six months of costs, startup advice written for funded companies says twelve to eighteen. A practical middle test: if losing a fifth of your income would leave you under six months of cash, building cash is the priority this quarter.