Calculate Your Runway
Your runway is the number of months your business can operate before running out of cash. This critical metric helps startups and growing businesses plan fundraising, cost cuts, and strategic pivots.
Frequently Asked Questions
What is a good runway for a startup in Ontario?
Most financial advisors recommend maintaining at least 12-18 months of runway for early-stage startups in Mississauga and the Greater Toronto Area. This buffer provides time to pivot, adjust strategy, or secure additional funding. Growth-stage companies in Ontario typically aim for 6-12 months. Insight Accounting CPA helps startups across the GTA optimize cash management and extend runway through strategic tax planning.
How do I extend my business runway without raising capital?
Ontario businesses can extend runway by: reducing discretionary spending, renegotiating vendor contracts, optimizing SR&ED tax credits (federal and Ontario Innovation Tax Credits), improving accounts receivable collection, switching from salary to dividends for owner-managers (where appropriate), and leveraging government grants. Mississauga-based Insight Accounting CPA specializes in cash flow optimization and government incentive programs that extend runway by 3-9 months on average.
What is burn rate and how does it affect my runway?
Burn rate is the amount of cash your business consumes each month (monthly expenses minus monthly revenue). A higher burn rate means shorter runway. For example, a Toronto startup with $200,000 in cash and $20,000/month burn has 10 months of runway. Reducing burn by just $5,000/month extends that to 13.3 months. Insight Accounting CPA helps GTA businesses identify burn reduction opportunities without sacrificing growth.
Should I include accounts receivable in my runway calculation?
Conservative runway calculations use only collected cash, not accounts receivable (AR). However, if your Ontario business has reliable AR from creditworthy customers with payment terms under 60 days, you can include a percentage (typically 70-90%) in extended runway projections. Mississauga businesses with government contracts or large enterprise clients may have more predictable AR. Consult with Insight Accounting CPA to determine the appropriate AR treatment for your industry and customer base.
When should I start fundraising based on my runway?
Ontario startup advisors recommend beginning fundraising when you have 6-9 months of runway remaining. Fundraising typically takes 3-6 months for seed rounds and 6-12 months for Series A+. Starting too late weakens your negotiating position and increases risk of running out of cash mid-raise. Toronto and Mississauga startups working with Insight Accounting CPA receive proactive runway alerts and fundraising timeline recommendations based on their specific metrics, industry benchmarks, and growth trajectory.