A startup rarely closes because its accounts show a loss. It closes when the bank balance cannot cover salaries. When rent, salaries, utilities and dollar-priced tools all rise in the same year, last year’s budget stops being a guide. This guide shows you how to calculate runway honestly, run a rolling 13-week cash forecast, and prepare for cost and currency shocks before they hit.
Runway in one line
Runway (months) = cash in the bank ÷ average monthly net burn.
- Gross burn: everything you spend in a month.
- Net burn: gross burn minus cash collected from customers in that month.
Use cash actually received, not invoices sent. A client in Lahore who pays in 60 days does not reduce this month’s burn.
Leave out money that is not yours: sales tax collected from customers, tax deducted from salaries that you must deposit, and customer deposits you may have to refund.
Hypothetical example: runway today
The startup and all numbers below are invented for illustration.
An Islamabad startup has PKR 12 million in the bank. Its monthly cash flow looks like this:
| Monthly item | PKR |
|---|---|
| Salaries | 1,000,000 |
| Office rent and utilities | 200,000 |
| Software and cloud tools priced in US dollars | 200,000 |
| Marketing and other costs | 100,000 |
| Gross burn | 1,500,000 |
| Cash collected from customers | 500,000 |
| Net burn | 1,000,000 |
Runway: 12,000,000 ÷ 1,000,000 = 12 months.
Now stress-test it
Twelve months assumes nothing changes. Assume instead that three things happen from month four:
- Annual increments raise salaries by 15%: an extra PKR 150,000 a month.
- The rupee weakens 10% against the dollar, so dollar-priced tools rise from PKR 200,000 to PKR 220,000.
- Rent and utilities rise by PKR 30,000 a month.
From month four, gross burn becomes 1,500,000 + 150,000 + 20,000 + 30,000 = PKR 1,700,000, and net burn becomes PKR 1,200,000.
The first three months use PKR 3 million. The remaining PKR 9 million lasts 9 ÷ 1.2 = 7.5 months. Total runway: about 10.5 months, not 12.
Three ordinary changes removed a month and a half of runway. That is why you plan with scenarios, not a single number. Run at least three: a base case, a cost-rise case and a case where a large customer pays two months late.
Build a rolling 13-week cash forecast
A monthly budget is too coarse when cash is tight. A 13-week forecast, one quarter laid out week by week, shows exactly when you would run short.
Set it up
- Columns: the next 13 weeks.
- Opening cash: your actual bank balance today.
- Cash in: expected customer receipts by week, based on invoice due dates and each client’s real payment habits, plus any confirmed investment or loan.
- Cash out: salaries on payroll dates, rent, supplier payments, tax payments, loan repayments and one-off items.
- Closing cash: opening cash plus cash in minus cash out. It becomes the next week’s opening cash.
Run it every week
- Every Monday, replace last week’s forecast with actual figures.
- Add a new week at the end, so you always see 13 weeks ahead.
- Note why actual figures differed from the forecast. Patterns, such as a client who always pays late, make the next forecast better.
Mark tax and statutory dates
Put tax payment and filing dates in the forecast so they never surprise you. FBR’s due-dates page lists income tax return deadlines, and your provincial revenue authority and adviser can confirm sales tax dates.
Ways to extend runway
Collect faster
- Invoice on the day work is delivered, not at month end.
- Ask for deposits or milestone payments on projects.
- Offer annual plans paid upfront.
- Chase overdue invoices weekly, and pause work for clients who fall far behind.
Spend deliberately
- Review every subscription and tool each quarter, and cancel what nobody uses.
- Negotiate longer payment terms with suppliers, and keep the promises you make.
- Tie hiring to a written plan linked to runway, and delay hires until revenue or funding supports them.
Manage currency exposure
- List every cost priced in dollars and every income stream received in dollars.
- If you export IT services, State Bank of Pakistan rules, as of 2026, let IT companies and freelancers retain USD 5,000 a month or 50% of export proceeds, whichever is higher, in an Exporters’ Special Foreign Currency Account, and convert to rupees when needed. Holding some dollar income against dollar costs reduces your exposure to rupee swings. Confirm current terms with your bank.
Watch the wider economy
The State Bank of Pakistan publishes Monetary Policy Statements several times a year, setting out its view on inflation and interest rates. Reading the latest one helps you set realistic cost and borrowing assumptions.
Set your trigger points in advance
Decide now what you will do at each runway level, so you act early rather than late. The thresholds below are hypothetical; set your own based on how long fundraising or a revenue push takes in your sector:
- Below 12 months: start fundraising or a focused revenue push.
- Below 9 months: freeze non-essential hiring and spending.
- Below 6 months: cut costs to reach profitability or to cover a full fundraising process.
Checklist
- Calculate gross burn, net burn and runway from bank data, not from the budget.
- Remove money you hold for others, such as sales tax and tax withheld from salaries.
- Run at least three scenarios: base, cost rise and late payment.
- Build a 13-week cash forecast and update it every Monday.
- List costs and income linked to the dollar.
- Write down runway trigger points and the actions tied to each.
- Share the runway figure with your co-founders every month.
Sources and further reading
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