Guide · 6 min read
Runway basics: how to calculate startup runway with three scenarios
How to calculate burn rate and runway, build base, downside and upside scenarios, and set clear trigger points so you act early instead of running out of cash.
By Startup Roof Editorial ·
General information, not financial advice. The numbers in this article are made-up examples to show the method. They are not benchmarks.
Most startups that close don't fail because of one bad decision. They run out of time to fix the things that weren't working. Runway is how you measure that time, and scenario planning is how you stop it from surprising you.
This guide covers the simple maths, how to build three scenarios, and how to turn them into decisions you make in advance.
The two numbers: burn and runway
Gross burn is everything you spend in a month: salaries, rent, software, marketing, licence renewals spread monthly, visas, professional fees.
Net burn is gross burn minus the cash that comes in from revenue in that month.
Runway is how many months you can keep going:
Runway (months) = cash in the bank ÷ average monthly net burn
Example. You have AED 300,000 in the bank. You spend AED 45,000 a month and collect AED 15,000 in revenue. Net burn is AED 30,000. Runway is 300,000 ÷ 30,000 = 10 months.
Simple, but three things trip founders up.
1. Use cash, not revenue booked
If a client owes you money on 60-day terms, it isn't in the bank yet. Count revenue when it's collected. Late payments are one of the most common reasons runway shrinks unexpectedly.
2. Include the lumpy costs
Annual and occasional costs are easy to forget: licence renewal, visa renewals, insurance, audit or accounting fees, annual software plans, equipment. Spread them monthly in your model, but also mark the month the cash actually leaves, so you're not surprised by a big payment.
For UAE businesses, put these in your calendar too:
- Trade licence renewal with your licensing authority.
- Visa and work permit renewals for you and any employees.
- Tax filings and payments, if you're registered for VAT or Corporate Tax. The Federal Tax Authority (FTA) publishes the deadlines.
- End-of-service gratuity you'll owe employees when they leave. It's a real liability even if you don't pay it monthly. See our guide to hiring your first employee.
3. Use an average, but watch the trend
Burn varies month to month. Use a three-month average for the calculation, and track the trend: if burn is rising, runway is shorter than the average suggests.
Why one number isn't enough
A single runway number assumes the future looks like the last three months. It won't. Revenue might grow faster or slower, a big client might leave, a hire might take longer. Scenarios give you a range, and the range is what helps you decide.
Building three scenarios
Start with a simple monthly sheet: rows for each revenue line and each cost line, columns for the next 18 to 24 months, and a cash balance row at the bottom. Then make three copies.
Scenario 1: Base case
Your honest best guess. Not your hopes; your expectation based on what's actually happening.
- Revenue grows at the rate you've seen recently, adjusted for anything you know is coming.
- Hires happen when you plan them, with a realistic lag (most hires take longer than planned).
- Costs include everything you've committed to.
Example. Revenue grows from AED 15,000 to AED 40,000 over 12 months. You make one hire in month 4. Cash runs out in month 13.
Scenario 2: Downside case
What happens if things go wrong in plausible ways? Not a disaster; a bad but realistic year.
- Revenue growth is half your base case, or flat.
- Your biggest customer leaves, or pays late.
- A key cost rises.
Example. Revenue stays at AED 15,000–20,000. The hire still happens in month 4. Cash runs out in month 8.
That gap between 13 and 8 months is the most useful number in your model. It tells you how much your plan depends on things going right.
Scenario 3: Upside case
What if things go better than expected? This matters too, because growth uses cash: more customers can mean more support, inventory, or hires before the revenue arrives.
- Revenue grows faster than base.
- You hire earlier to keep up.
Example. Revenue reaches AED 70,000 by month 12, but you hire two people in months 3 and 6. Cash runs out in month 14, barely later than base, because growth was funded up front.
The upside case often shows that success creates its own cash problem. Better to know in advance.
Turning scenarios into decisions: trigger points
The point of scenarios isn't prediction. It's deciding in advance what you'll do, so you act calmly and early.
Write down trigger points: specific conditions that cause specific actions.
| Trigger | Action |
|---|---|
| Runway falls below 9 months in the base case | Start fundraising or revenue-acceleration plan now |
| Two consecutive months tracking the downside case | Freeze non-essential spending; pause new hires |
| Runway falls below 6 months | Cut to the minimum team and costs that keep core customers served |
| Upside tracking for three months | Approve the next hire, but only if downside runway stays above 9 months |
The exact thresholds are yours to set. Raising money or closing large deals usually takes months, so most founders set the first trigger well before the cash gets tight.
Ways to extend runway
There are only two levers: bring cash in sooner, or send it out later (or not at all).
Bring cash in sooner
- Ask for deposits or upfront payment, especially on custom work.
- Offer a discount for annual prepayment.
- Shorten payment terms, and follow up on late invoices consistently.
- Look at non-dilutive programmes. Our guide to UAE startup grants and funding programmes lists official ones; check eligibility on each programme's own site.
Send cash out later, or not at all
- Use monthly instead of annual software plans while you're uncertain.
- Use free cloud credits where you qualify.
- Choose flexible workspace over long leases.
- Use freelancers for project work before committing to full-time hires.
- Review subscriptions every quarter and cancel unused ones.
What not to cut: things that directly keep your best customers happy, and legal or tax compliance. Penalties and lost customers shorten runway faster than the savings extend it.
A monthly runway routine
Spend 30 minutes once a month:
- Update actual cash, revenue collected and spend for last month.
- Recalculate net burn (3-month average) and runway.
- Check which scenario you're tracking closest to.
- Check your trigger points.
- Update the next three months of lumpy costs.
- Write one sentence: what's changed and what you'll do about it.
If you have co-founders or investors, share that sentence and the runway number with them every month. Nobody likes surprises about cash.
Runway checklist
Where Startup Roof fits
Knowing your runway is one of the simplest habits that keeps founders in the game. Startup Roof is a UAE-first founder ecosystem with source-checked guides, founder tools and templates, and a community of people building here. Explore startuproof.com to see what's there. Questions or corrections: hello@startuproof.com.
Build. Scale. Grow.
Sources (checked 16 Oct 2026)
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