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Run rate
The term run rate refers to how the financial performance of a company would look if you were to extrapolate current results into the future, over a certain period of time.[1] The term "run rate" takes into consideration both the costs related to the operation of the business and the revenue generated by the business. If the company's revenues do not cover the costs, the "run rate" is another way of saying how much the company is losing each month.
Run rate can sometimes be confused with the term "running costs," which is the amount it takes to run a company -- typically measured in monthly or quarterly increments. Thus, if a company costs $100,000 per month to operate, it has $100,000 of running costs.
As many startups need time to develop and manufacture a product, or build a restaurant, or develop a software application, the period before revenue or "pre-revenue" is typically a time when "run rate" and "running costs" are synonymous.
If such a pre-revenue company has received venture funding, a "run rate" can also be referred to as a "burn rate."
It is important to clarify what you mean with the term "run rate" when having discussions with potential investors in a start up company.
