There are two versions and the difference matters. Gross burn is everything going out the door in a month — salaries, software, rent, contractors, ads. Net burn is gross burn minus the cash actually collected that month. Net burn is the number that determines how long you survive; gross burn is the number that tells you how expensive the machine is to run regardless of sales.
For a founder, burn is the closest thing to a heartbeat. It is not a target to minimise blindly — a business burning nothing is often a business standing still — but it must be a number you can say out loud without checking. Burn moves quietly: a few annual subscriptions, a contractor extended by a month, a payment processor fee that scales with volume. Nobody decides to increase burn by 30%; it accretes. Founders running several ventures should calculate it per business, because a healthy one can mask a bleeding one on a combined statement.
A concrete example: your consultancy collects $12,000 in a month and spends $19,000 — $9,000 on a contractor, $6,000 to yourself, $4,000 on tools and hosting. Gross burn is $19,000. Net burn is $7,000. If your account holds $56,000, that net burn is the input for runway: eight months, assuming nothing changes. It always changes, which is why you recalculate monthly rather than annually.