Margins and burn rate are key metrics important for every startup. Margins indicate how efficiently you run your business and how susceptible it is to revenue volatility. The burn rate is typically used to describe the rate at which a new company is spending its venture capital to finance overhead before generating positive cash flow from operations. It is a measure of negative cash flow. The burn rate is usually quoted in terms of cash spent per month.
Please watch our Youtube video for a detailed walk-through explaining how to calculate margins and the burn rate. We will discuss how to perform the calculation even if you are pre-revenue as well as how to formulate assumptions.
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