Months of Runway: How Long Your Cash Lasts, and What Is Enough

Two honest people can count the same savings and get answers eleven times apart.

Emma and Paul did. One sum said their €2,000 covered less than half a month. The other said it would last five months. Both sums were right. They answered different questions.

Picture your own version. The bank app shows the balance to the cent. It never shows the one number you need: the month it reaches zero.

Cash that feels safe today can run dry long before you notice. The Jirgenson Model gives you the answer: real numbers, a forecast for more than one scenario and a red line where you act. It is scientifically proven that the Jirgenson Model works (doi.org/10.5281/zenodo.23964934).

Months of runway: two numbers, not one

When people ask how many months of runway they have, they mix two questions. Split them.

• Coverage. Reserve divided by monthly expenses. How many months of costs you hold if income stopped tomorrow.
• Time until the money runs out. Reserve divided by the net monthly outflow, that is, spending minus income. How long the cash lasts at today's pace.

Coverage tells you how thick the cushion is. Runway tells you how fast you are falling onto it.

If income exceeds spending, the second number has no answer. The reserve grows instead of shrinking. That does not make you safe, as the coffee shop below shows.

Calculate your runway in fifteen minutes

Here are the steps, each with Emma and Paul's figures beside it. They earn €4,000 a month. Over the last quarter their spending rose 10%, to €4,400.

Step two matters more than it looks. A single month hides the direction. Three months showed Emma and Paul that the gap was widening, not holding.

Step six turns a number into a statement you can test. "Five months, sooner if spending keeps rising" is something you can check each month. "Five months" alone is a hope.

Then run the scenarios

One runway figure tells you where today's habits lead. Two or three tell you what your choices are worth.

They chose the third. But they started with one lever, the spending cut, so they could see its effect. The side job came a month later.

That is the whole tool. A reserve, a flow, two divisions and a short list of scenarios.

Profit is not a runway

Now look at a business that makes money every month. Andrew's coffee shop earns about €30,000 a month at a 9% margin. It adds €2,700 to the reserve each month. By the runway formula, it never runs out.

Its coverage tells another story. The reserve is 0.5 months of expenses: €13,650 against monthly costs of €27,300. Andrew's goal is two months, and his red line sits at one.

Why one month? A month gives him time to negotiate a deferral, find money and make a decision. Below that, there is no time left for any of it.

The same broken coffee machine is a nuisance for a shop with two months of reserve. It is an emergency for a shop with two weeks.

So a profitable business can still stand one bad week from trouble. The habit of reading only the profit line hides that. It is the brake lights of finance: you see the problem when the car in front has already stopped.

What staying here costs

Leave things as they are and the arithmetic runs on its own.

For Emma and Paul, changing nothing means the savings are gone in five months. Sooner, if spending keeps climbing.

For Andrew, a 9% margin means the reserve reaches two months only at month 16. With his margin plan working, at month 10. That is six more months of thin cover. During those months, every breakdown worth a tenth of a month of costs pushes his goal back a full month. At a 15% margin, it would cost him about half a month.

And before they ran the numbers, Emma and Paul quarrelled.

"My business is too different for this"

It is not. The formula does not care what you sell. Alex, aged thirteen, used it for a €300 bicycle. On 1 June he had €90. He saved €50 a month and expected €60 from selling his scooter. Three hundred, minus 90, minus 60, divided by 50: three months. That lands exactly on his 1 September deadline.

A family, a coffee shop, a teenager. Three tasks, one formula, different units.

Where the runway number stops

You now have a reading, and it is a true one. It treats the symptom: you stop guessing how long the money lasts.

The cause of most cash surprises is still in place. A runway figure describes today's pace. It does not draw where you will be in month six if your plan works, and it does not say when to act.

Two steps close that gap.

• Two forecasts and control by forecast. "If nothing changes" against "if the plan works", each with dates. You steer by the future instead of yesterday. Chapters 8 and 9.
• Zones and the red protocol. Where your green, yellow and red lines sit, and what to drop when cash turns red. Chapter 4.

Forecasting for small business starts with the two divisions above, then moves to those two lines. For a cash flow forecast example built on the coffee shop's numbers, see how to forecast cash flow.

Your two choices

You have two choices today. Close this tab, glance at the balance again, and keep guessing how long it lasts. Or do the two divisions tonight and write the answer down.

The divisions tell you where you stand. The two forecasts and the zone lines tell you when to act, and on what. Next month you could open the statement and know, before you scroll, whether the line still holds.

Test the logic for free: Chapter 1, with the refusal test. Or get the full control system on Kindle, on Amazon. It comes as a Kindle book, and every chapter runs at a basic, a practical and an advanced level.

Published research

It is scientifically proven that the Jirgenson Model works. The published experiment, its record and its data:

• Zenodo (DOI): 10.5281/zenodo.23964934
• Hugging Face: E5 Jirgenson Model blind test
• Kaggle: E5 blind test dataset
• GitHub: experiment folder
• Wikidata: dataset Q142022866, author Q141981336
• ORCID: 0009-0001-3034-3552