Your Runway Is Shorter Than You Think
The hidden costs that eat your runway — and why most founders miscalculate how much time they actually have.
Last week we walked through how a rolling cash flow forecast works — and why most people stop maintaining one after two ambitious weeks.
But here’s the thing a forecast can’t tell you if you’re feeding it the wrong inputs. And most founders are.
Let’s talk about runway — specifically, why yours is almost certainly shorter than the number in your head.
Most people calculate runway the same way: take your bank balance, divide by your monthly expenses, and call it a number. If you’ve got $120,000 in the bank and you’re spending $15,000 a month, that’s eight months. Simple math. Reassuring math.
Wrong math.
That $15,000 doesn’t include the quarterly tax payment you haven’t accrued for. It doesn’t include the annual insurance premium that renews in three months. It doesn’t include the contractor you’re about to bring on because you physically cannot keep doing everything yourself. And it definitely doesn’t include the salary you should be paying yourself but aren’t — which isn’t generosity, it’s deferred pain.
Here’s a stat that should sit with you: 38% of startups and a whopping 67% of small businesses that fail cite running out of cash as the reason. Not a bad product. Not a weak market. They simply ran out of money — often while believing they had more time than they did.
The gap between “runway on paper” and “actual runway” is usually somewhere between two and four months. That’s the distance between hidden costs, lumpy expenses, and the optimism bias that makes founders round up on revenue and round down on spend.
Meanwhile, the funding environment isn’t making this any easier. Nearly half of all venture capital in late 2025 went to AI companies — with a third of that going to just eighteen startups. If you’re building anything outside the AI hype cycle, capital is scarce and getting scarcer. Only 20% of companies that raised seed rounds in 2022 have gone on to raise a Series A. The rest are either dead, zombie-walking, or trying to become profitable on what they have.
Which brings us to the uncomfortable question.
Paul Graham coined a term years ago: Default Alive. It means: if your revenue keeps growing at its current rate and your expenses stay flat, will you become profitable before you run out of cash?
If the answer is no, you’re Default Dead — and every month you don’t confront that is a month closer to an emergency you could have prevented.
The Default Alive calculation isn’t complicated in theory. But doing it honestly means tracking your real burn rate (not the one that excludes the things you’d rather not think about), projecting your actual revenue trajectory (not the hockey stick in your pitch deck), and updating it regularly as conditions change.
So basically… everything that’s hard to do in a spreadsheet while also running a company.
This is the problem we keep coming back to in every post, and it’s the reason we built MyRunwayHealth. Not because founders can’t do math — they can. But because the math only works if the numbers are current, comprehensive, and brutally honest. And maintaining that view manually, week after week, while also doing the work that actually generates revenue? Something always slips.
A runway number you checked two months ago isn’t a runway number. It’s a memory. And memories are generous — they round up the good stuff and forget the quarterly tax bill.
The best version of this isn’t checking your runway once a quarter when something feels tight. It’s having a live view that updates as money moves, flags when you’re burning faster than planned, and tells you the truth even when you’d rather not hear it.
How do you calculate your runway right now? And when was the last time you actually updated it? I’d love to hear what hidden costs have bitten you.