Shop $42k cash, burn $28k/mo
Stable service revenue.
Runway ~1.5 months — below 3-month comfort; line of credit or cut overhead flagged.
Calculator · Free
Cash Runway Calculator
See how many months of cash you have at current burn — and what revenue change keeps you solvent.
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 | Monthly net cash | Runway (months) |
|---|---|---|
| -20% | -$892 | 47.1 |
| -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.
How the math works
Cash on hand + collectible AR − near-term AP and payroll ÷ average monthly burn (overhead + average variable on expected revenue) = months of runway. Optional scenario cuts revenue 20% to stress test.
Where to find each input
- Bank balances — operating accounts
- AR aging — due within 30 days realistic collectibility
- AP and payroll next 30 days
- Average monthly overhead from P&L
Worked examples
Seasonal roofer pre-season
$120k cash, burn $45k winter, revenue ramp in 6 weeks.
Runway 2.7 mo static — stress test with zero revenue 8 weeks shows need for bridge.
Strong AR $60k, AP $25k
Net liquid after AP still positive.
Runway extends if AR collects — tool notes collection risk discount optional.
What this does not include
- Equipment loan covenants
- Personal reserves outside business
- Insurance claim timing
- Tax payment lumps
Regional adjustment
Burn rate is your books — geography affects revenue seasonality, not the runway formula.
Accuracy and references
Small business liquidity guidance from SBA and SCORE; 3–6 month cash target common in trade contracting.
Counterpart bridge
What homeowners see for the same decision
Homeowners use the paired tool for benchmarks and questions before they hire. Align your numbers with what they are already comparing against.
Open Home Service Financing Payment CalculatorHomeowner counterpart
We publish Home Service Financing Payment Calculator for the same decision from the customer side — use it to sanity-check how your bid will read against national ranges.
View FinancingCommon 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.
How much runway is enough?
Three months minimum for stable service; six for seasonal or single-client heavy.
Include LOC?
Optional — undrawn LOC is not cash until drawn.
Count equipment loans?
Debt service in burn; principal payoff optional.
AR discount?
Haircut AR 10–30% if collection is slow.
Owner draw in burn?
Include if regular — skipping pay is temporary fix only.
Revenue drop scenario?
Stress test shows runway if sales fall 20% — common planning.
Separate tax account?
Exclude tax escrow from operating runway or label separately.
Weekly vs monthly burn?
Monthly default; divide by 4.33 for weekly view mentally.
Compare to break-even?
Break-even is profit-neutral revenue; runway is cash timing.
When to panic?
Under 4 weeks without committed AR — accelerate collections and delay discretionary spend.
You may also need
The next decision usually follows directly from this one.
- CalculatorBreak-Even CalculatorFind the revenue and billable hours required to cover fixed and variable costs.
- Calculator1099 Estimated Tax CalculatorFigure quarterly estimated tax for 1099 contractors — federal income tax, self-employment tax, and what to set aside from each check.
- CalculatorShop Rate CalculatorDetermine the shop rate you must charge per billable hour to cover overhead and hit your income target.
- CalculatorPrice Increase Impact CalculatorModel what happens to revenue and profit when you raise prices — and how many customers you can afford to lose.
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