Runway is a decision, not a number

Ask a founder how much runway the company has and you will hear one number. Fourteen months. Eighteen months. It sounds like a fact. It is a forecast with a hiring plan hidden inside it.

Runway is the cash you have divided by the cash you burn. The first number is easy. The second number is a decision you have not made yet. Hire two engineers in March and the runway you quoted in January is gone. Nobody lied. The number simply had no owner.

Three runways, not one

Work with three numbers instead of one. The first is the current runway: cash today divided by the average burn of the last three months. It is the number you could defend in front of an auditor.

The second is the plan runway. It uses the hires, the launches and the commitments you have already agreed. It is usually four to six months shorter than the first.

The third is the default-alive date. This is the month where, if you stop hiring and spending on anything new, revenue and cash meet. It tells you whether the company can survive on its own.

Pick the date, then the spend

A runway is useful only when it is attached to a date you care about. That date is rarely "the day the bank balance hits zero". It is the day you must have a signed term sheet, because most rounds take four to six months from the first meeting to money in the bank.

Count backwards. If the plan runway ends in October, you need to start the round in April at the latest. If that feels too early, the lever is not the pitch deck. The lever is the plan.

What to do on Monday

Write the three numbers on one page. Next to each, write the single decision that would change it most: a hire, a price rise, a customer who pays late. Put the page in front of your co-founders and ask one question: which date are we managing to?

If the answer takes more than a minute, the company has a runway number and no runway decision. The fix is cheap. An hour with the model, a pencil and the people who sign the offers will do it.

When to ask for help

A second pair of eyes helps most when the plan runway and the default-alive date are far apart. The gap is a measure of how much the company is betting on its next round. That is a perfectly good bet to make, but only on purpose.

A fractional CFO can run this exercise in a single session, because the model is usually already half built. What you get is not a better number. It is a date, a reason for it, and a short list of the decisions that move it.

Runway is not a number you report. It is a number you manage.