The burn rate refers to the rate at which a business spends venture capital to pay overhead before cash is being generated from general operations. If a business burns through their cash too fast, they risk running out of money and going out of business. However, if a business doesn’t burn enough cash, it may not be spending enough money investing in its future which could lead to falling behind the competition. Measuring the burn rate allows you to forecast when your business is in need of financing or when you’ll be able to expand.
