How many months of runway do I have if revenue drops to zero?
The worst-case scenario question. If every customer disappeared tomorrow, how long could you keep the lights on? Here is how to calculate your runway.
The short answer
How long could you survive with zero revenue? Divide your current cash balance by your average monthly expenses. The result is your runway in months. Most small businesses have less than 3 months. Many have less than 1.
Why knowing your zero-revenue runway matters
You probably do not expect revenue to drop to zero. Neither did restaurants in March 2020. Neither did the agency whose largest client filed for bankruptcy. Neither did the contractor whose biggest project got canceled mid-build.
Zero-revenue runway is not about predicting disaster. It is about knowing your margin of safety. A business with 6 months of runway can survive a bad quarter, negotiate from a position of strength, and take calculated risks. A business with 3 weeks of runway cannot afford a single missed invoice.
This number also tells you how much time you have to react. If your runway is 2 months, you have 60 days to cut costs, find new revenue, or secure financing before the math becomes fatal.
The runway calculation explained
Runway is one of the simplest and most important numbers in business:
Use average monthly expenses from the last 3-6 months, not just the most recent month. One-time costs or seasonal patterns can skew a single month. The average gives you a more realistic burn rate.
Important: this assumes zero revenue. You are not subtracting income. This is the pure survival number. How long can your cash last if nothing else comes in?
How to calculate runway in QuickBooks Online
You need two numbers from two reports: cash from the Balance Sheet and expenses from the Profit and Loss.
- 1Get your cash balance
Go to Reportsin the left sidebar. Search for “Balance Sheet.” Set the date to today. Note “Total Bank Accounts” under Current Assets.
- 2Get your average monthly expenses
Go to Reports→ “Profit and Loss.” Set the date range to the last 3 months (e.g. January 1 - March 31). Find “Total Expenses” at the bottom. Divide that by 3 to get your average monthly expense.
- 3Divide cash by monthly expenses
Example: your Balance Sheet shows $124,000 in bank accounts. Your P&L shows $123,000 in total expenses over 3 months, so $41,000/month. $124,000 / $41,000 = 3.0 months of runway.
- 4Sanity check: include upcoming obligations
Your P&L expenses are historical. If you know a big cost is coming (quarterly taxes, insurance renewal, equipment), add it to your monthly average. Runway that does not account for lumpy expenses is optimistic.
Total time: about 8 minutes for two reports and one division. The hard part is not the math. It is knowing whether your expense average is realistic.
How to calculate runway in Xero
Same two numbers, different menu paths.
- 1Get your cash balance
Go to Accounting → Reports→ “Balance Sheet.” Find “Bank” under Current Assets.
- 2Get average monthly expenses
Go to Accounting → Reports→ “Profit and Loss.” Set the period to the last 3 months. Find “Total Operating Expenses.” Divide by 3 for your monthly average.
- 3Calculate runway
Cash / average monthly expenses = months of runway. Xero also has a “Short Term Cash Flow” projection report under Reports that can supplement this calculation, though it does not show the zero-revenue scenario directly.
Total time: about 8 minutes. The Xero P&L comparison view makes it easy to see 3 months side by side for a better expense average.
Why a one-time calculation is not enough
Runway changes every month. Your cash goes up or down. Your expenses creep or spike. Here is what makes it hard to track consistently:
- Expenses are lumpy. One month is $38,000, the next is $52,000 because of a quarterly tax payment. Your runway swings with it. A single-month snapshot can be dangerously misleading.
- Cash is not just what is in the bank. You might have $80,000 in your account, but $25,000 is earmarked for payroll taxes you have not remitted yet. Your real runway is based on $55,000, not $80,000.
- You need the trend, not just the number. Is your runway growing or shrinking? A runway that was 4 months in January and is now 2.5 months in April is a problem, even though 2.5 months sounds okay in isolation.
Or get your runway calculated automatically, every month
Bottomline connects to your QuickBooks or Xero account and calculates your zero-revenue runway on the first of every month. It uses your rolling 3-month expense average and your actual cash position, not estimates.
Bottomline also tracks the trend. If your runway has been shrinking for three consecutive months, your report flags it. You do not have to remember to check. You do not have to do the math. And you do not have to wonder if your expense average includes that quarterly tax hit or not.