Lesson content
Scroll through numbered sections or jump via the outline.
What you'll take away
- Founder salaries (even ₹50k matters for runway honesty).
- Employer PF/ESI contributions.
- Professional fees: CA, legal, compliance retainers.
- Cloud, SaaS tools, WeWork/co-working.
- Performance marketing and sales travel.
Gross vs net burn
Gross burn: total cash out each month (salaries, rent, tools, marketing).
Net burn: gross burn minus cash collected from customers — what actually leaves the bank.
Founders raising funds should speak net burn after revenue; bootstrapped founders often track gross to control costs.
Runway formula
Runway (months) = Cash in bank ÷ Net monthly burn.
Always model two scenarios: base case and 'revenue drops 30%' — Indian B2B sales often slip by a quarter.
Add 2-month buffer for GST payments, advance tax, and festival-season slowdowns.
What belongs in burn (India)
- Founder salaries (even ₹50k matters for runway honesty).
- Employer PF/ESI contributions.
- Professional fees: CA, legal, compliance retainers.
- Cloud, SaaS tools, WeWork/co-working.
- Performance marketing and sales travel.
- One-time costs: incorporation, trademark, ESOP setup — tag separately so they don't inflate recurring burn.
When to cut vs when to invest
Cut: tools with overlap, unused seats, marketing with CAC > LTV, hiring ahead of revenue.
Invest: compliance that prevents penalties, sales after proven unit economics, inventory only when turnover justifies.
Rule of thumb: below 6 months runway, freeze discretionary spend and model bridge or revenue plan explicitly.
Board and investor reporting
Share monthly: opening cash, inflows, outflows by category, closing cash, runway.
Indian angels often ask 'GST working capital' — show receivables ageing if B2B.