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The Money Metric You Might Not Know -- But Should

Think you'll run out of money before you turn a profit? Then do this.

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This story appears in the November 2016 issue of Entrepreneur. Subscribe »

Paul Graham, founder of the accelerator Y-Combinator, coined a term every startup should know: default dead. It is a pretty simple concept. Assume that your expenses and revenue growth remain constant, and now fast-forward into the future: Will you run out of money before you turn a profit? That means you’re default dead. (And if you will escape the red before running out of cash, congrats: You’re default alive!)

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Related: 4 Fast Ideas to Rapidly Grow Your Revenue

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