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is your startup burning too much cash here's a good way to measure it I call it the burn multiple the formula looks
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like this burn multiple equals net burn divided by net new ARR and you want to measure this for a given period for
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example if you burn $3 million in a quarter and you generate $1 million of net new ARR that's a burn multiple of
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three once you measure your burn multiple you can assess whether it's good or not I have some rules of thumb
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around this if your burn multiple is under one that is amazing efficiency if your burn multiple is in the one to one
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and a half range that's great if you're at one and a half to two that's good two
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to three you're getting a little bit iffy it's suspect and over three is bad every company that's successful that
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wants to become profitable will eventually have to reduce their burn multiple so low that it hits zero so
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that's the goal start with a burn multiple that's high in the early days and gradually get it down over time
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that's how I think about how to manage your burn at a startup