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True Trade Path

Calculator · Free

Cash Runway Calculator

See how many months of cash you have at current burn — and what revenue change keeps you solvent.

Cash position
$

Checking + savings available for the business.

$/mo
Monthly cash flows
48%

Materials, field labor, subs — scales with revenue.

$/mo

Rent, insurance, truck, admin, software.

$/mo

What you take out of the business each month.

0%

Seasonal slowdown or growth scenario.

Cash runway

∞cash-flow positive

Generating $3,060/month net cash at 52% contribution margin.
Monthly net cash flow
$3,060
Contribution margin
52%
Monthly burn (if negative)
—
Target reserve (6 months)Recommended minimum cash cushion
$100,200
Revenue change scenarios
Revenue changeMonthly net cashRunway (months)
-20%-$89247.1
-10%$1,084∞
0%$3,060∞
+10%$5,036∞
+20%$7,012∞

Cash-flow positive — build reserves during strong months

You generate $3,060/month in net cash. The risk is not running out — it is not saving enough during peak season. Target $100,200 in reserves for seasonal dips.

What this assumes

  • Monthly figures are averages — seasonal businesses should model worst months separately.
  • Owner draw is treated as a cash outflow, not retained earnings.
  • Does not include accounts receivable collection timing or line of credit availability.

Important

Three months of cash reserves is the minimum for a trade business. Six months is the target. Below two months, stop discretionary spending and accelerate collections before taking on new work.

Understanding the result

Profit and cash are different

You can be profitable on paper and run out of cash. A $40,000 job billed in January with 60-day payment terms does not pay the February payroll. Runway measures cash in the bank, not P&L profit.

Seasonal trades need seasonal reserves

An HVAC shop that does $80,000 in summer and $25,000 in winter needs 6 months of winter burn saved from summer profit. Average monthly revenue hides the months you bleed cash.

Runway tells you when to act

Below 3 months: freeze hiring and equipment purchases. Below 2 months: call overdue accounts, negotiate vendor terms, and line up a credit line. Below 1 month: you are making decisions under duress.

Common questions

How much cash should a contractor have in reserve?
Three months of operating expenses is the minimum. Six months is the target for seasonal trades or single-truck operations. Calculate as total monthly fixed cost plus owner draw minus average monthly net cash from operations.
How do I calculate cash runway?
Cash on hand ÷ monthly cash burn. If you have $45,000 and burn $7,500/month (expenses plus owner draw minus revenue), runway is 6 months. Positive monthly cash flow means infinite runway if revenue holds.
What is a good cash runway for a small trade business?
Six months or more. A one-truck plumber with $8,000/month fixed cost needs $48,000 in reserve. Below three months, prioritize collections and cut discretionary spending before growth investments.
Why do profitable contractors run out of cash?
Fast growth (new truck and tech before revenue), slow collections (net-30 customers paying at 60 days), tax payments (quarterly estimates on accrual profit), and equipment purchases. Profit on paper does not pay Thursday's payroll.
How do I extend cash runway quickly?
Collect overdue invoices, offer a discount for prepayment, delay non-essential purchases, negotiate vendor payment terms, and draw on a pre-arranged credit line. Raising prices on new quotes adds margin without immediate cash but helps within 30 days.

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