A 15-minute exercise · one honest number

The 11pm Runway Check

One question: how many months can your company survive if things go wrong? Not the optimistic number. The honest one. Most founders are off by 30%. Below is the exercise to find your real answer, and the four decisions that come with it.

Step 1

Find your real cash

Start with what's in the bank. Subtract the money that isn't actually yours to spend.

A · Cash in your bank accounts today

Only money you could move tomorrow. Don't count loan facilities you haven't drawn — a promise from a bank is not cash.
B · Money you owe but haven't paid yet

Three buckets, add them up: (1) taxes you've collected or withheld but not sent to the government (payroll tax, sales tax) — that money was never yours. (2) customer prepayments you'd owe back if they cancelled (e.g., a customer who paid you 12 months in advance and is 3 months in — you'd refund 9 months). (3) unpaid bills from vendors you've been stretching to delay.
C · What it would cost to close the company

If you had to shut down next week, you'd still owe: severance for the team (4–8 weeks of pay per person, more if you have 100+ employees), unused vacation paid out, the rest of the office lease and annual software contracts, plus a tail insurance premium (~$25k–$75k). This money belongs to closing the company, not running it.
D · Customer invoices that may not arrive

Any invoice more than 60 days late, plus everything outstanding from any single customer worth more than 10% of your yearly revenue. Until it hits the bank, pretend it doesn't exist.
= REAL CASH (A − B − C − D)

This is what you can actually spend. Not the bank balance. This.

Step 2

Find your real monthly burn

How much money the company actually loses each month — averaged across a long enough window that one good month doesn't lie to you.

E · Average monthly loss — last 3 months

For each of the last 3 months: total money out minus total money in. Add the three, divide by 3. Use real bank numbers, not the budget.
F · Average monthly loss — last 6 months

Same math, longer window. A 6-month average catches one-time events (a big customer prepay, a quiet bonus month) that make the 3-month look better than reality.
= REAL BURN (use whichever is HIGHER)

Always pick the bigger of E and F. The point of this exercise is to see the worst plausible truth — not to feel better.

Step 3

Compute your two runways

The friendly one and the honest one.

G · BASE RUNWAY = REAL CASH ÷ REAL BURN

Months of survival in a normal world. This is what most boards look at.
H · STRESS RUNWAY

Redo the math after subtracting the cost of ONE bad thing happening in the next 60 days. Pick whichever you genuinely couldn't survive:
· your biggest customer pays 60 days late
· your cloud / AI bill jumps 50%
· the bank cancels your credit line
· a contract worth more than 15% of revenue doesn't renew
H is the number that should drive every decision this quarter.

What your stress runway tells you to do

Find your H. Read the matching row. That's your job this quarter.

24+ months

You're fine — if you're efficient

Having cash isn't enough anymore. If you also keep growing fast without burning a fortune per new dollar of revenue, you can raise from top investors at a clean price. If you're burning more than $1.50 to earn each new $1, having 24 months doesn't help — investors will see a company that spends too much, not a strong one.

18–24 months

Start fundraising now

Below 18, the best investors won't lead your round at a clean price. They want to see you start with comfortable runway, not arrive desperate. Begin conversations this month — not in three.

12–18 months

Freeze every non-essential spend this week

No new hires, no new agencies, no new annual contracts, no travel that doesn't close a deal. Cut now, while you still have leverage. If you wait until 9 months, you'll cut anyway — but in panic, in front of a team that already sensed it.

Under 6 months

You're not running a company — call the board this week

Three real options, ranked: insider bridge (your existing investors put in more), strategic acquisition / acqui-hire, or controlled shutdown. If you don't pick one, one picks you in 30 days. Investors who hear bad news early respect you and help. Investors who find out late stop trusting you.

Four early warnings that fire before the bank balance does

Cash is a lagging signal — by the time it drops, you're already months into a problem. These four show up first.

1. Existing customers are spending less this year than last year. If the cohort of customers you had 12 months ago is now smaller in total revenue, your engine is leaking. It will show up in cash 6 months later.
2. Customers are paying you slower than before. If your average days-to-collect has grown by 10+ days compared to six months ago, your customers are under pressure. Some won't survive to renew.
3. Each dollar of revenue costs more to deliver than it used to. If your gross margin (revenue minus the direct cost of producing it) has dropped 2+ percentage points two quarters in a row, something is quietly eating you — usually cloud, AI, or inference costs.
4. Win rate is dropping AND deals are taking longer to close. One of these alone is noise. Both together is the market telling you something has changed.

If any two of these are firing AND your stress runway is under 12 months — call the board this week. Not next quarter.

What to actually do Monday morning

Knowing where you stand is not the work. This is the work.

If H is under 18 months

Freeze new hires (don't announce it as a freeze — just stop approving requisitions).
Offer 5–8% discount to your biggest customers if they prepay another year.
Stand up a 30-minute weekly meeting: founder + finance + head of sales. Topic: cash this week.

If H is under 12 months

Call your top 5 software vendors. Ask for 20% off or switch to month-to-month.
Renegotiate your cloud / AI contract — most have hidden flexibility if you ask.
Personally call your 5 biggest overdue accounts and ask for payment this week.
Draw your credit line BEFORE you need it. Banks tighten when you look stressed.
Tell the team: "We're focused on getting profitable. Here's what changes." Don't whisper it.

If H is under 6 months

Plan layoffs (if 100+ employees, the WARN Act 60-day clock starts now).
Identify the 3 people you can't lose. Give them retention bonuses paid in 6 months.
Write a customer-comms script for every customer worth more than 10% of revenue.
Call your lead investor before you call anyone else. Insider bridge first.
Quietly explore acqui-hire optionality in parallel.

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