What Is the 6-Month Rule in Business?

  • Startup

The 6-month rule suggests you need 6 months of operating expenses in cash reserves to weather downturns safely. This buffer keeps your business solvent if revenue dips or unexpected costs arise. For startups; this often means having 6 months of runway before you need to reach profitability or raise more capital. Many investors look at runway as a key metric—how long can you operate before cash runs out? Maintain disciplined budgeting and track cash flow monthly to know your real runway number.

R&D Offer Quiz

Step 1 of 3

Answer to find out if you're eligible for R&D tax credits.

Do the activities performed relate to a new or improved business component’s function, performance, reliability, quality, or composition?(Required)
For Example: A mid-sized packaging company develops a slightly modified cardboard box design to improve its stacking strength (reliability) for warehouse storage, involving minor adjustments to the corrugation pattern to reduce collapse under standard weight loads.
Is your company trying to discover information to eliminate uncertainty concerning the capability or method for developing or improving a business component?(Required)
For Example: A furniture manufacturer investigates whether a cheaper wood adhesive can hold joints as effectively as the current one during assembly, testing bond strength to resolve doubts about its capability in standard production lines.
Do the activities performed constitute a process of experimentation?(Required)
For Example: An auto parts supplier runs a series of bench tests on different lubricant formulations to find one that reduces friction in engine bearings more effectively, systematically comparing wear rates over simulated operating cycles.