# How much runway does a hardware startup actually have?

Runway is the date a cash forecast crosses an unacceptable minimum, under stated assumptions. Cash divided by monthly burn is a useful first reading, but hardware decisions also require customer payment dates, production spend, inventory, and supplier terms.

## Four readings, one company

Chapter 6 presents **four runway readings** for one illustrative company, progressively adding signed orders, receivables, and a probability-weighted pipeline with payment terms. The lesson is the spread between scenarios, not a precise survival date. Paul Graham’s [default-alive test](https://go.speedstrapping.com/default-alive-or-dead) asks the related question: do existing resources and the current trajectory get the company to profitability?

Separate contracted collections from hoped-for sales. A customer signing a contract is not the same as money arriving, and a pipeline probability does not make a missed payment less expensive.

## Worked example: the cash trough matters

**Illustrative assumptions.** With $300,000 cash and $50,000 monthly net burn, a flat calculation gives six months. A $100,000 receipt in month three seems to add two months, assuming no change in costs. But if delivering that order needs $120,000 of extra production cash in month two, the receipt cannot be counted by itself.

Under these assumptions, month two ends with $80,000: $300,000 − $100,000 of ordinary burn − $120,000 production spend. Month three ends at $130,000 after another $50,000 burn and the $100,000 receipt. A delayed receipt or cost overrun changes that low point. Use weekly intervals around the tightest dates.

## Keep three versions current

Maintain a contracted base case, a downside with delayed collections and delivery costs, and an upside that labels uncontracted opportunities. State the minimum cash reserve and the date a financing decision must be made. Update actual collections and spending before relying on the forecast again.

---

This page is an original summary of an argument developed in *Speedstrap*, not an extract from the book.

From Chapter 6 of *Speedstrap*. [Find the book on Amazon](https://go.speedstrapping.com/book).

[What is speedstrapping?](/speedstrapping/) · [Meet the authors](/authors/) · [Use the AI companion](/agents/)