Quick answer
Cash burn rate tracking measures how quickly a business is spending its cash, usually as net cash out per month. It is the input to runway and a core signal of financial health. For inventory-heavy consumer brands, burn must be tracked as an average across purchasing cycles, since a single month can swing wildly with a large inventory buy.
Gross vs. net burn
There are two burn numbers, and confusing them causes bad decisions.
Key term: Gross vs. net burn. Gross burn is total cash spent per month. Net burn is cash spent minus cash coming in. Net burn drives runway; gross burn shows the underlying cost base.
Why a single month misleads
For a consumer brand, one month's burn can look alarming or wonderful depending on whether a big inventory purchase landed in it. Tracking burn on a single month leads to whiplash decisions. The honest number is burn averaged across a full purchasing cycle, so inventory timing does not distort the signal.
What to track alongside burn
- Net burn trend. The direction over several months, not one.
- Runway. Cash divided by average net burn.
- Burn multiple. Cash burned per dollar of new growth, a quality-of-growth check.
- Inventory-adjusted view. Burn excluding one-off stock builds.
Rule of thumb. Track burn as a trailing average, not a single month, and always next to runway. Burn without runway is a number without a deadline.
Where Drivepoint fits. Drivepoint tracks burn and runway from a live model that accounts for inventory timing, so the numbers reflect the real trend instead of a single distorted month.