How to Calculate Burn Rate in Looker with AI

Tracking your burn rate is one of the most important things you can do for the health of your business. It tells you how quickly you’re spending money and, critically, how much time you have before you run out. This article will explain what burn rate is, why it matters, and provide a step-by-step guide on how to calculate and visualize it in Looker.

What is Burn Rate and Why Does it Matter?

Burn rate is the speed at which your company is spending its cash reserves before it reaches profitability. Understanding it isn't just a task for your finance team, it provides a real-time pulse check on your company's operational efficiency and long-term viability. When investors or board members ask "how's it going?" your burn rate and the resulting financial runway are core parts of the answer.

There are two primary types of burn rates you should know:

Gross Burn Rate: This is the total amount of money your company spends in a given period, usually a month. It includes all your operating expenses like salaries, rent, software subscriptions, and marketing costs. It gives you a clear picture of your total monthly cash outflow.
Net Burn Rate: This is the number that most people refer to when they talk about "burn rate." It represents the actual amount of cash your company loses each month. The formula is simple:
Net Burn = Total Expenses - Total Revenue
If you spend $100,000 in a month and bring in $60,000 in revenue, your net burn is $40,000. This is the amount your cash balance decreases by.

Calculating your burn rate isn't an academic exercise. It directly impacts strategic decisions, helping you determine your financial runway - the number of months you can continue operating before your bank account hits zero. It shows you if your growth is sustainable or if you need to adjust spending, boost sales, or raise more capital.

Preparing Your Data for Looker

Before you can build any visualizations in Looker, your data needs to be clean, organized, and available in a database Looker can connect to. You can’t build a useful report with messy or incomplete information.

1. Identify Your Data Sources

Your financial data likely lives in several places. Your goal is to consolidate all income and expense data into a single table in a data warehouse (like BigQuery, Redshift, or Snowflake) that Looker can access. Common sources include:

Accounting Software: QuickBooks, Xero, or FreshBooks for your chart of accounts.
Payment Platforms: Stripe, Braintree, or PayPal for revenue transactions.
Payroll Systems: Gusto, Justworks, or Rippling for salary expenses.
Expense Management: Ramp, Brex, or Expensify for employee expenses.

2. Structure Your Consolidated Data Table

Once you’ve piped data from these sources into your warehouse, you should structure it into a single table with a clear, consistent format. A good structure would include at least these four columns:

transaction_date: a timestamp for when the transaction occurred.
amount: the monetary value of the transaction.
transaction_type: a simple category like 'income' or 'expense'.
category: a more detailed description like 'Salaries', 'Marketing Ad Spend', 'Software Subscription', or 'Product Sales'.

Consistency here is critical. Ensure that "Software" isn't categorized as "SaaS Subscriptions" in one month and "Software Tools" in the next. Standardizing these categories is the foundation of accurate reporting.

Calculating Burn Rate in Looker: A Step-by-Step Guide

With your data prepped and ready, you can now use Looker’s modeling layer (LookML) and Explore interface to calculate and visualize your burn rate.

Step 1: Define Key Measures and Dimensions in Your LookML View

LookML is where you define your business logic. Open the appropriate LookML view file that corresponds to your financial data table. You'll need to define dimensions to slice your data and measures to aggregate it.

First, create a dimension_group for your date column so you can easily group transactions by day, week, month, or year.

Next, define measures to calculate your total monthly expenses and revenue. Use a filter to tell Looker which transactions to include in each calculation based on your transaction_type column.

Finally, create a new measure for Net Burn. This simply subtracts your total_revenue measure from your total_expenses measure.

Step 2: Build Your Burn Rate Report in an Explore

Now that your metrics are defined in LookML, anyone on your team can analyze them without writing code. Go to the "Explore" section in Looker and find the view you just edited.

Select a Timeframe: In the Dimensions, find your "Created Month" dimension and click it. This will group all your data by month.
Select Your Measures: Under the Measures section, click on "Total Expenses," "Total Revenue," and "Net Burn."
Run the Query: Hit the "Run" button. Looker will generate a data table showing your total expenses, revenue, and net burn for each month.

Step 3: Visualize Your Data

While the table is informative, a visualization makes the trends instantly clear. Above your data table, click on the visualization tab and choose an option that suits your data.

Column Chart: A column chart is great for comparing monthly performance. Drag and drop your measures to configure the chart with columns for Total Expenses and Total Revenue, and then add Net Burn as a line to see how it trends over time.
Stacked Column Chart: To see the composition of your expenses, you can add your category dimension to the query and create a stacked column chart showing what you're spending money on each month.

Customize the colors and labels on your chart to make it easy to read, then save it as a Look or add it to a financial dashboard for ongoing tracking.

Beyond the Basics: Calculating Your Financial Runway

Your burn rate is one half of the equation, your runway is the other. The runway tells you how many months you can survive at your current net burn rate before your cash runs out.

The formula is: Runway (in Months) = Current Cash Balance / Average Monthly Net Burn

Calculating the average net burn smooths out any single-month anomalies, giving you a more realistic forecast. Instead of going back to LookML, you can create this metric directly in an Explore using Looker's Table Calculations feature.

Navigate to your Burn Rate chart.
In the Data table section, click the "Calculations" tab and then "Add calculation".
Write a formula to calculate a 3-month or 6-month moving average. For a 3-month average, the formula would be: mean(offset_list(${net_burn_rate}, 0, 3))
Name the calculation something clear, like "3-Month Avg. Net Burn" and hit save.

Now you have your average monthly net burn. Since your real-time cash balance may not live in your data warehouse, the final step often involves a simple manual calculation: just divide your current cash on hand by the "3-Month Avg. Net Burn" figure you just created in Looker.

A Few Common Pitfalls to Avoid

As you build your reporting, keep an eye out for these common issues:

Inconsistent Categorization: As mentioned before, messy data creates untrustworthy reports. A single subscription classified as "Marketing Tool" one month and "Software" the next can make it hard to track departmental spend accurately. Set clear data governance rules.
Ignoring One-Time Spikes: A large one-time expense, like an annual subscription payment, can make your net burn rate look alarming for a particular month. Using a moving average calculation helps in calculating average burn and runway, providing a balanced view.

Final Thoughts

Calculating your team’s burn rate and runway in Looker is not just possible, it's a highly rewarding activity to keep a health check of your company's operational well-being. By organizing your financials properly into a unified database source and setting intelligent business metrics within Looker Studio, anyone on the team can quickly access visualization reports about where the company really stands, without requiring specialized BI development skills. This is how proactive, intelligent strategy can actually happen using dashboards effectively in real-time.

Of course, spending time setting up pipelines, cleaning your data, and crafting logical statement blocks manually into Looker code can seem quite time-consuming for someone new to coding. For those whose expertise leans less on data backend configuration, we made this process smoother with our dashboard service. At Graphed , we can immediately connect tools like QuickBooks directly to our systems. So if you need to know how your burn rate is tracking, just ask us: “Hey Graphed, make me dashboards outlining monthly expenditure patterns versus earnings since June, then chart them out.” Let AI create these visual dashboards for review by any departmental heads immediately when needed.