Question 1

What is cash flow runway?

Accepted Answer

Cash flow runway is how many months your business can continue operating with current cash reserves before running out of money, assuming no change in revenue or expenses. It is calculated as Current Cash Balance ÷ Monthly Net Cash Burn.

Question 2

How many months of runway should a small business have?

Accepted Answer

Most financial advisors recommend small businesses maintain at least 3–6 months of operating expenses in reserve. Seasonal businesses may need 6–12 months to cover slow periods. Businesses with irregular revenue (project-based, construction, etc.) should aim for the higher end.

Question 3

How can I extend my business cash flow runway?

Accepted Answer

Key strategies include: (1) accelerate receivables with shorter payment terms and automated invoicing, (2) defer non-essential expenses, (3) negotiate extended payment terms with suppliers, (4) improve lead generation to increase revenue, and (5) explore CRA payment arrangements or BDC financing if needed.

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