Subscribe for 50% off
Subscribe

The Money Metric You Might Not Know -- But Should

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

By
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!)

Shutterstock

Related: 4 Fast Ideas to Rapidly Grow Your Revenue

Cyber Monday Subscription Sale - Unlock this subscriber exclusive article and more for 50% off.

Access all Entrepreneur content with no ads, unlock discounts, and get exclusive advice only available to our subscribers. Plus, our magazine delivered straight to your door.
Get 50% off an annual subscription today. Just use code SAVE50 at checkout.

Entrepreneur Editors' Picks