How many months a business can keep operating on its current cash before running out, calculated by dividing cash reserves by monthly burn rate.
Runway is how long your business can keep operating before it runs out of cash — your reserves divided by your monthly burn rate. If you have $18,000 saved and burn $6,000 a month, you have three months of runway.
For sellers, runway is the number that tells you how much risk you can take. Three months of runway means you can be picky about clients and say no to bad-fit work; two weeks means you take whatever you can get. Extending your runway — through savings or lower fixed costs — literally buys you better decisions. For buyers, this is internal, but a freelancer with runway is one who won’t cut corners out of desperation.
The honest version of runway accounts for taxes you still owe and the minimum you need to live on, not just the account balance. A common target is three to six months of expenses set aside. Building that buffer is exactly what our guide on an emergency fund for freelancers is about — it’s the difference between weathering a slow quarter and scrambling.