Quick Answer
For search, voice, and "just tell me what to do".
Runway-based management means knowing exactly how many days of operation your current cash supports, then making decisions based on that number rather than optimistic assumptions about future revenue.
Key Takeaways:
- Runway is the ultimate business vital sign
- Hope is not a financial strategy - data is
- AI calculates runway scenarios faster than humans
- Decision quality improves with runway visibility
Playbook
Calculate current monthly burn rate (all expenses)
Divide available cash by monthly burn for base runway
Model three scenarios: optimistic, realistic, pessimistic revenue
Set decision triggers at runway milestones (90, 60, 30 days)
Create action plans for each trigger point
Use AI to stress-test assumptions weekly
Communicate runway status to stakeholders regularly
Adjust operations proactively as runway changes
Common Pitfalls
- Only calculating runway once during fundraising
- Using best-case revenue assumptions
- Ignoring runway until crisis hits
- Not having pre-planned responses to runway changes
Metrics to Track
Current runway in days (cash / daily burn)
Runway trend (improving, stable, declining)
Burn rate multiple (how much more runway per dollar saved)
Decision trigger distances
FAQ
What is a healthy runway for a small business?
Most advisors recommend 6-12 months of runway as a target. Under 3 months signals danger requiring immediate action. Over 18 months may indicate under-investment in growth.
How often should I recalculate runway?
Weekly for businesses under 6 months runway, monthly for stable businesses. Always recalculate after major changes to revenue, expenses, or cash position.
What decisions should runway trigger?
Below 6 months: pause non-essential hiring. Below 3 months: cut discretionary spending. Below 2 months: explore financing or exit options. These triggers should be pre-planned, not reactive.
Related Reading
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