What is Burn Rate?

A definition of Burn Rate

“Burn rate is the rate at which a company spends its cash reserves before generating a positive cash flow. It is crucial in assessing the financial health and sustainability of a startup or business.”

Burn Rate in Business Glossary - What is a Burn Rate?

Business Glossary > What is Burn Rate?


Examples of Burn Rate in a Sentence:

Startups must track their burn rate closely to manage their cash flow.

The company reduced its burn rate by cutting unnecessary expenses.

An investor asked about the burn rate before funding the startup.

Why is Burn Rate Important in Business?

Understanding burn rate is essential for startups as it determines how long a company can operate before requiring additional funding. Monitoring burn rate helps in making strategic financial decisions to ensure business sustainability.

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Associated Terms

Here are some associated business terms and synonyms for “Burn Rate”:

  • Cash Burn
  • Cash Runway
  • Expenditure Rate

WeWork’s Burn Rate

WeWork, during its rapid expansion, demonstrated a high burn rate, raising billions of dollars to cover its costs. Investors scrutinized WeWork’s burn rate when assessing its financial sustainability and potential for profitability.

Final Notes on Burn Rate

Entrepreneurs should evaluate the following when managing burn rate:

  • Optimizing operational efficiency
  • Securing sufficient funding
  • Balancing growth strategies with cash reserves

Proper burn rate management ensures longevity and financial stability for startups.


This has been a definition of Burn Rate meaning.

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