Forecast how much cash your startup needs over the next 6–24 months based on your hiring and growth plans.
Net cash outflow this month
Average new employees per quarter (fully loaded cost ~$15K/mo each)
Salary + benefits + equipment + overhead per new employee per month
How much marketing budget increases each month
How many months to forecast
Total Cash = Σ(Monthly Burn over N months) × 1.2 bufferIn plain English
Sum monthly burn over the forecast period. Each quarter, add hiring costs. Each month, add marketing growth. Apply 20% buffer.
Worked Example
$80K starting burn, 3 hires/quarter at $15K each, $5K/mo marketing growth, 18 months: peak burn ≈ $215K/mo. Total cash needed ≈ $3.1M with buffer.
Most founders manage to current burn. The dangerous assumption is that burn stays flat. In reality, every hiring decision, marketing initiative, and infrastructure investment increases burn — often faster than expected.
A 12-month cash forecast forces you to confront the math: if you're planning to hire 12 people this year and each person costs $15K/month all-in, that's $1.8M of annualised burn increase on top of your current run rate.
| Stage | Starting Burn | Burn at 18 months | Primary Driver | Status |
|---|---|---|---|---|
Pre-seed | $20–50K/mo | $50–100K/mo | First hires | |
Seed | $80–150K/mo | $200–400K/mo | Team + GTM | |
Series A | $300–600K/mo | $600K–1.5M/mo | Sales + Marketing |
Source: Sequoia Internal Benchmarks · OpenVC Survey 2024
Forecasting burn at current levels
If you plan to hire 15 people, model the full loaded cost of those 15 people from their start date. A common mistake: raising $3M based on current $100K/month burn, then burning $400K/month 8 months later after hiring.
Underestimating fully-loaded cost per employee
Salary is only 60–70% of total employment cost. Add: payroll taxes (~8%), benefits (~15%), equipment ($3–5K upfront), software licenses, and office space. A $120K salary engineer costs ~$170K/year fully loaded.
Not including one-time costs
Office buildout, legal fees for fundraising, infrastructure migration, or product launches create one-time cash spikes. These don't show up in monthly burn but significantly impact total cash requirements.