How to Build a Runway Model You Will Keep Using
How to build a runway model with four inputs on one screen: cash, money in, money out, balance. Keep it simple, connect your accounts and refresh monthly.
To build a runway model, use four inputs on one screen: opening cash, money in by month, money out by month, and the balance projected forward until it hits zero. Keep outflow to five or six categories, connect your accounts, and refresh it on a fixed day each month.
How to build a runway model you will actually keep using
Forget the clever spreadsheet. The clever spreadsheet is a trap.
Complexity in a runway model is almost always a substitute for maintaining a simple one. You spend a weekend on tabs, scenarios and formulas. It feels like rigour. Three months later nobody has updated it, and you're steering by a number from a world that no longer exists.
An elaborate model that's three months stale is worse than a crude one that's current. So the brief is not "build the best model". It's "build the one you'll still open in six months".
The four inputs, and nothing else
That's the entire structure. It fits on one screen.
- Opening cash. What's in the account today.
- Money in, by month.
- Money out, by month.
- The resulting balance, projected forward until it crosses zero.
The month the balance crosses zero is your runway. Everything else in this post is about making those four inputs honest, because the arithmetic was never the hard part.
If you've not yet settled what counts as cash and which burn to use, do that first. The definitions in how to calculate business runway are the foundation, and a model built on loose definitions only automates the confusion.
Free guide · 23 pagesKnow how long you actually have.The Runway Playbook: the number that sets every other deadline, and how to stop finding out late.Get the free guide →Split the outflow so you can steer
One line called "expenses" gives you the clock and nothing to act on. When the number drops, you can't see why. When you need to extend it, you can't see where the money is.
Split outflow into a handful of categories you can make decisions about:
- Tools and subscriptions
- Infrastructure and hosting
- Contractors
- Marketing
- Professional services
- One-offs
Five or six is right. Twenty is bookkeeping, and you'll stop maintaining it by March. The point isn't accounting accuracy. It's that when you need more time, you can see immediately which levers exist.
What goes in each part of the runway model
| Part of the model | What goes in | What stays out |
|---|---|---|
| Opening cash | The balance that is actually in the account | Credit you could draw, grants not yet paid, anything signed but unsent |
| Expected receipts (separate line) | Near-certain incoming amounts, each with a date | Anything that merges into the balance before it arrives |
| Money in, by month | Contracted and probable revenue | Hoped pipeline (it gets its own upside line) |
| Money out, by month | Five or six categories, with lumps in the month they land | A single smoothed "expenses" figure |
| Both versions | A current-burn runway and a planned-burn runway | Only the comfortable one |
| Update record | The new number and one sentence on why it moved | Silent overwrites that erase last month |
That table is your spec. If your sheet matches it, you're done building.
Connect the accounts. Please.
The most common reason a model goes stale is dull. Updating it is a manual chore you must remember on a busy evening. And you won't.
Anything that pulls transactions automatically removes the main reason the number goes out of date. It also removes a whole class of transcription errors that quietly corrupt a hand-maintained sheet. A typo in one cell and your runway is off by a month, with no warning.
If you take one operational step from this whole guide, take this one. The model that updates itself is the model you'll still trust in six months. For a solo operator with no finance person, that's the difference between a tool and a hobby.
Put the lumps where they live
Averages hide lumps. Annual and quarterly payments, tax cycles and a big one-off purchase don't smooth themselves out in reality, even though they do in a spreadsheet average.
So place each known lump in the month it actually lands. A comfortable average can still fail one particular month, and the model should show you that month before it arrives. This is the single feature that makes a month-by-month model worth more than a single division.
Three buckets for money in
Revenue is where models lie. They do it kindly, on a good day.
Sort expected income into three honest buckets. Contracted: signed, with a date. Probable: a renewal on the usual pattern, or a deal at a stage that historically closes. Hoped: the pipeline.
Steer by the first two. Show the third as a separate line so you can see what it would do, without letting it fund a decision. The full method for sorting them is in how to forecast income for runway.
Two runways in one sheet
Build the sheet so it produces two answers. One assumes you carry on exactly as you are. One includes everything you've said you'll commit to.
The second is shorter, which is why people leave it out. Don't. When the two diverge sharply, you haven't made a plan. You've made a wish with a shopping list attached. Better to see that on a screen than discover it in the bank.
Free assessmentHow trapped are you, really?Take the Corporate Suffocation Index, the free solopreneur readiness assessment.Take the assessment →Refresh on a fixed day
Not when you feel nervous. A specific date, the same each month, half an hour.
Pull the actuals. Compare them against what the model predicted. Update the forward assumptions. Write down the new number and why it moved. That last step is what turns bookkeeping into an early-warning system. The movement is the signal, and you only see movement if you kept a record of what you said last time.
The routine is laid out in how to review runway monthly.
A layout you can copy on Monday
Picture a grid. Months run across the top, starting with this one and carrying on until the balance goes negative. Down the side, in order:
- Opening cash for the month.
- Contracted income. Probable income.
- Your five or six outflow categories, one row each.
- Net movement for the month.
- Closing balance, which becomes next month's opening cash.
- Underneath, a clearly labelled row for hoped income and what it would add. Never added to the balance above.
That's one screen. A lump like an annual renewal sits in its own month, in its own category. You'll see at a glance which month hurts, and which row to blame.
Check it against reality
A model is a set of claims about the future. So test them.
Every month, compare what the sheet predicted with what the bank shows. Where they differ, find out why before you move on. Was it a late payment? A cost you forgot? A guess that was optimistic? The gaps teach you which of your own assumptions to distrust. After a few months you'll know where you tend to be too hopeful, and you can correct for it.
Here's the habit that matters most. When the number improves, investigate it just as hard. A better figure might be a payment that slipped into next month, or a cost deferred rather than removed. Good news you haven't examined is a delay you haven't noticed.
What the model is for
A model sitting in a file earns nothing. Its whole value is in a small number of decisions you allow it to drive.
Which commitment can I afford? How many months does this cost? Do I wait for the slow deal, or chase the fast small one? Is it time to act? Those questions are answered in how to set runway alert thresholds, and the model is only the thing that feeds them. Build it to answer those, and stop adding anything that doesn't.
Free guide · 23 pagesKnow how long you actually have.The Runway Playbook: the number that sets every other deadline, and how to stop finding out late.Get the free guide →Then stop building your runway model
This is the hardest instruction in the post.
Don't build scenario trees. Don't build a five-year model. Not until the simple version has run for a full quarter and has actually changed a decision. Sophistication here is a well-known form of procrastination, and it's seductive precisely because it looks like rigour.
You have a business to grow. Every hour in a clever spreadsheet is an hour not selling. Finish the crude version, use it, and let reality tell you what it's missing.
Free assessmentHow trapped are you, really?Take the Corporate Suffocation Index, the free solopreneur readiness assessment.Take the assessment →Frequently asked questions
How complicated does a runway model need to be?
Not very. Four inputs: opening cash, money in by month, money out by month and the projected balance. It should fit on one screen. Complexity is usually a substitute for maintaining the simple version.
How many expense categories should I use?
Five or six. Enough to see where the money is and which levers exist, few enough that you keep updating it. Twenty categories becomes bookkeeping, and you will stop.
Should I connect my bank accounts to the runway model?
Yes, if you can. Stale models mostly die because updating is a manual chore. Pulling transactions automatically keeps the number current and removes typing errors that quietly corrupt a hand-kept sheet.
When should I add scenarios?
After the simple model has run for a full quarter and actually changed a decision. Before that, scenarios are procrastination dressed up as rigour.
The full method, with the checklists, is in The Runway Playbook, a free 23-page playbook.
How trapped are you, really?
Take the Corporate Suffocation Index, the free solopreneur readiness assessment.