Gross Burn Rate
The total amount of cash a company spends each month, excluding revenue.
Definition
Gross Burn Rate represents the total monthly operating expenses of a company without considering any revenue coming in. It shows the raw cost of running the business and helps founders understand their total monthly cash requirements.
How to Calculate
Formula:
Gross Burn Rate = Total Monthly Operating Expenses
Includes:
- • Salaries and benefits
- • Office rent and utilities
- • Software subscriptions
- • Marketing expenses
- • Equipment and supplies
Real-World Example
Tech Startup Monthly Expenses:
- • Salaries: $60,000
- • Office rent: $8,000
- • Software tools: $3,000
- • Marketing: $5,000
- • Other expenses: $4,000
Gross Burn Rate = $80,000/month