Runway, computed from the bank balance and not the pitch deck

Every founder knows their runway number. Very few can show where it came from. That is because the common calculation ("cash divided by monthly burn") uses a burn figure drawn from the forecast, not from the bank statement.

Here is the version that holds up under a board question: take the bank balance on the first of the month. Subtract the bank balance 90 days earlier. Divide by three. That is your trailing 90-day burn, and it is the only burn figure you should divide your cash by when you are running the runway calculation.

Example. A company with $1.6M in the bank, a plan that projected a $140K monthly burn, and a trailing-90 burn of $205K. Plan-based runway says 11.4 months. Bank-based runway says 7.8 months. The gap is almost always the difference between what the founder expected to spend and what actually moved out of the operating account, including the off-cycle items (deposits, annual insurance, tax estimates) that the forecast either missed or understated.

What to do with the honest number:

• If trailing-90 burn is more than 120% of planned burn, you are not in a cash-management problem, you are in a planning-accuracy problem. Fix the forecast before you cut costs.
• If runway is under nine months, shift to a trailing-60 burn and re-run weekly. The signal matters more than the smoothing at that range.
• Separate one-time items (tax payment, deposit refund) so you can show the board two numbers side by side, but never use the adjusted number as the operating decision.

The point of the calculation is not precision. It is honesty. A board that trusts your runway number will let you run longer on it. A board that catches one surprise will review the number with you every month for a year.