Cash Burn Rate is one of the core financial metrics you have to keep in mind, all the time.
Okay, but what is it?
There are 2 different burn rates:
- Gross Burn Rate: It’s the average amount of money, monthly consumed, to pay for your startup’s activities. In other words, it’s how much money you are spending per month to pay for salaries, rent, energy, marketing, development, services, and other expenses.
- Net Burn Rate: It’s the average monthly negative cash flow. For this metric, you’ll consider not only your expenses, but any revenues that you might have too.