How to Calculate Burn Rate in Excel with ChatGPT

Knowing your company's burn rate is one of the most fundamental parts of running a business, yet it’s often tracked in a messy spreadsheet that gets updated once a month - if you’re lucky. This article will walk you through how to calculate, track, and visualize your burn rate in Excel. We’ll even show you how ChatGPT can help you with formulas and spreadsheet structure, saving you a bit of time along the way.

What Is Burn Rate and Why Does It Matter?

Before jumping into spreadsheets and formulas, let’s make sure we’re on the same page about what burn rate actually is and why it's so important for founders, marketers, and managers to track.

It's Simpler Than You Think

At its core, burn rate is the speed at which a company is spending its cash reserves. Think of it like managing your personal bank account: if you spend more money than you make in a month, you've "burned" through some of your savings. For a business, this calculation reveals how long it can operate before it needs to generate profit, raise more funding, or cut costs.

There are two main types of burn rate to be aware of:

Gross Burn Rate: This is the total amount of cash your company spends in a month on operating expenses. It includes everything from salaries and rent to software subscriptions and marketing campaigns.
Net Burn Rate: This is the number that really tells the story. It's the difference between your cash out (expenses) and your cash in (revenue). If you spend $50,000 in a month but bring in $30,000 in revenue, your net burn rate is $20,000.

Why You Should Be Obsessed with It

Tracking your burn rate isn’t just an accounting exercise, it’s a critical tool for strategic decision-making. Here’s why it deserves your attention:

It Calculates Your Runway: Your burn rate directly determines your "cash runway" - the number of months you can stay in business before you run out of money. Knowing you have 12 months of runway versus 3 months completely changes how you plan for the future.
It Informs Spending Decisions: Is it the right time to hire a new sales rep? Can you afford to double your ad spend next quarter? Your burn rate gives you the financial context to make these calls confidently, rather than just guessing.
It’s a Key Metric for Investors: If you're seeking funding, investors will absolutely want to know your burn rate. It shows them how efficiently you’re using capital and helps them understand how much money you actually need and how long it will last. A well-managed burn rate signals fiscal responsibility.

Calculating Burn Rate in Excel: The Manual Way

Excel or Google Sheets is the go-to tool for most businesses starting out. It's flexible, familiar, and gets the job done. Let's build a simple burn rate tracker from scratch.

Step 1: Gather Your Expense and Revenue Data

Your first task is to round up all the necessary financial figures. You’ll need a monthly breakdown of all your expenses and revenue streams. Most of this info can be pulled from your accounting software like QuickBooks, your payment processor like Stripe, or even just your business bank statements.

Your expenses may include:

Salaries and payroll taxes
Rent or office costs
Software subscriptions (SaaS tools)
Marketing and advertising spend
Contractor or freelance fees
Utilities and insurance

Step 2: Structure Your Excel Sheet

Create a new spreadsheet and set up a simple table. The goal is clarity, not complexity. You can structure it like this:

Column A: Month
Column B: Total Revenue
Column C: Total Expenses (This represents your Gross Burn)
Column D: Net Burn

Go ahead and populate the first three columns with your data for the last 6-12 months. Your spreadsheet should look something like this:

Step 3: Add the Formulas for Burn Rate

Now, let's make Excel do the work. The formulas are straightforward.

Calculating Net Burn (Column D)

In cell D2, you'll calculate the difference between your expenses and revenue for the first month. The formula subtracts your revenue (B2) from your expenses (C2):

=C2-B2

Click on the small square at the bottom-right corner of cell D2 and drag it down to apply this formula to all the rows in your table. If the number is positive, you're burning cash. If it's negative, congratulations - you're profitable that month!

Calculating Average Burn Rate

An average gives you a more stable, predictable number to work with. Below your table, find an empty cell and use the AVERAGE formula to calculate your average net burn over the period you’ve documented.

=AVERAGE(D2:D7)

This will give you a single, essential number that represents your typical monthly cash burn.

Step 4: Visualize the Data with a Chart

Numbers in a table are good, but a chart tells a story. Visualizing your burn rate makes it easy to spot trends.

Highlight your data, including the headers (from A1 to D7 in our example).
Go to the "Insert" tab in Excel's ribbon.
Choose a "Column" or "Line" chart. A combination chart can be very effective here: you can show Revenue and Expenses as bars and your Net Burn as a line.

This quick visualization can instantly tell you if your burn is increasing, decreasing, or staying flat over time relative to your revenue.

Using ChatGPT to Speed Up Your Excel Workflow

Okay, you know how to do it manually. Now, where does ChatGPT fit in? While ChatGPT can't connect to your live data or directly manage your spreadsheets, it's an excellent assistant for generating formulas, creating table structures, and debugging errors.

When ChatGPT Is Actually Useful for Excel

Think of ChatGPT as a data-savvy coworker you can bounce ideas off of. It's most helpful for:

Generating Formulas: Instead of fumbling through Excel's functions, you can describe what you need in plain English and get back the exact formula.
Structuring Data: You can ask it to suggest the best way to lay out your financial data for analysis.
Debugging VLOOKUPs and Pivot Tables: If a formula isn't working, you can paste it into ChatGPT and ask what's wrong.

Example 1: Generating the Net Burn Formula

Let's say you're staring at your spreadsheet and unsure of the best way to write the formula. You could give ChatGPT a simple prompt like this:

Prompt: "I have an Excel sheet where Column A is 'Month', Column B is 'Total Revenue', and Column C is 'Total Expenses'. I need a formula for Column D, 'Net Burn', which is the total expenses minus the total revenue for each month. The first row of data is on row 2."

ChatGPT's Likely Response:

"Certainly! For cell D2, you can use the following formula:"

=C2-B2

"Then, you can drag the fill handle down from cell D2 to apply this formula to the rest of the rows in your data set."

Example 2: Creating a Rolling Average

Maybe you want to track a 3-month rolling average of your burn rate to smooth out any spiky months. This is a slightly more complex formula that ChatGPT can handle easily.

Prompt: "Using the same Excel sheet, I want to calculate a 3-month rolling average for the 'Net Burn' in Column D. The 'Net Burn' data starts in cell D2. What formula should I put in cell E4 to get the average of the first three months?"

ChatGPT's Likely Response:

"To calculate a 3-month rolling average for the data in column D, starting in cell E4, you can use this formula:"

=AVERAGE(D2:D4)

"You can then drag this formula down from E4. For example, the formula in E5 will automatically adjust to =AVERAGE(D3:D5), giving you the next 3-month rolling average."

Important Caveats: The Limits of This Approach

Using ChatGPT with manually exported Excel files is a solid first step, but it’s crucial to understand its limitations:

It's a Static Snapshot: The minute you export data from QuickBooks or Stripe into a CSV, it's already out of date. Your analysis is always a look in the rearview mirror, not a real-time view.
Manual Work Is Unavoidable: You still have to do the manual work of exporting data, cleaning it up in Excel, and copy-pasting everything into reports every week or month. It saves a little time on formulas, but the core drudgery remains.
Risk of Data Errors: Manually handling data introduces the risk of copy-paste errors, incorrect formulas, or referencing the wrong cells, which can lead to bad decisions.
Privacy Concerns: Be very careful about uploading sensitive financial information directly to ChatGPT. For formula generation, it's best to use descriptive prompts with example data rather than your actual company financials.

Next Step: Calculating Your Cash Runway

Once you’ve calculated your average monthly net burn, the next logical question is: "So, how long do we have left?" This is your cash runway.

The formula is stunningly simple:

Runway (in months) = Current Cash Balance / Average Monthly Net Burn

For example, if you have $200,000 in the bank and your average monthly net burn is $20,000, your calculation would be:

$200,000 / $20,000 = 10 months of runway

This single number is your financial deadline. It guides your hiring plans, marketing budgets, and fundraising timeline. Seeing this number change month over month is one of the most powerful motivators for running an efficient business.

Final Thoughts

Mastering your burn rate in Excel is a vital skill. By organizing your data, using simple formulas, and creating visualizations, you move from just guessing about your financial health to actively managing it. And with a tool like ChatGPT, you can quickly generate formulas and troubleshoot your spreadsheets, making the process a little less intimidating.

Manually exporting data to build these reports in Excel definitely works, but we found the process of constantly downloading CSVs and updating the same spreadsheets to be slow and tedious. To solve this, we built Graphed to connect directly to all of our business data sources - like our accounting software, ad platforms, and CRM - in one place. Now, instead of wrestling with spreadsheets, we can get a live look at our burn rate, cost of acquisition, and sales performance just by asking questions in plain English, giving us the real-time visibility we need to make faster decisions.