The Founder's Finance Cheat Sheet
Founders do not need to become accountants overnight, but they do need six terms that come up in every planning conversation: MRR, CAC, LTV, burn, runway and break-even. Each is defined below with the formula behind it.
· Updated · 3 min read
- You need a working vocabulary, not an accounting qualification.
- The core terms are MRR, CAC, LTV, burn, runway, and break-even.
- Agree which version of a term you mean, such as net or gross burn, before you plan with it.
- Each term maps to a planning decision: runway sets when you raise, and CAC and LTV set how hard you push growth.
Why plain-English terms help
Several of these terms have a loose meaning and a precise one. 'Burn' can mean total spend or spend net of revenue, and the two give very different runways. Agree on the precise version before you plan.
A founder's mini glossary
MRR: Monthly recurring revenue, what subscribers pay you each month, with annual plans spread across the months they cover.
CAC: Customer acquisition cost: sales and marketing spend in a period divided by new customers won in that period.
LTV: Lifetime value, the gross profit you expect from a customer before they leave. A simple estimate is monthly gross profit per customer divided by monthly churn.
Burn: Cash going out each month. Gross burn is total spend; net burn is spend minus cash from customers, leaving out new investment or loans. In these guides, burn means net burn unless stated.
Runway: Months your cash lasts: cash in the bank divided by net monthly burn.
Break-even: The point where revenue covers total cost. In units: fixed costs divided by (price minus variable cost per unit).
Seeing each term as a live number
Forecast Engine is designed to show each term as a number in your own model, calculated from your own inputs, instead of a definition to memorise.
See the terms as live numbers
- Built to calculate MRR, burn, runway, and break-even from your own inputs.
- Learn each term from your own figures instead of a textbook example.
- Designed to carry the same numbers into your plan and investor conversations.
The founder's finance cheat sheet
Frequently asked questions
Do I need to learn accounting?
No. You need a working vocabulary and the ability to read the numbers that drive decisions.
Which term matters most early on?
Runway, because it sets the clock on every other decision you make.
Where do these terms come from?
MRR comes from subscription businesses; CAC, LTV, burn, runway and break-even apply to most startups. The formulas here are the ones the other Startup Suite guides use.
Still have questions? Talk to the team.
