What Healthy Burn Looks Like at $25M, $50M, and $100M+
A tactical guide to scaling without sinking
If you’re running a $25M+ consumer brand, you already know: growth at any cost is no longer acceptable. The capital environment has shifted. Investors are less forgiving. Lenders are more conservative. And boards — whether founder-friendly or private-equity backed — are asking sharper questions.
Yet one question still floats unanswered in too many executive discussions and boardrooms:
“What’s an acceptable burn rate for a business like ours?”
It’s a fair question — and one I hear constantly as interim and strategic CFOs to omnichannel brands ranging from $10M to $250M+ in revenue. Whether it’s DTC-heavy skincare, a multi-channel beverage company, or an apparel brand adding wholesale and retail doors, the reality is the same: not all burn is bad, but not all burn is smart.
In this essay, I’ll explain what healthy burn looks like at $25M, $50M, and $100M+ — depending on your business model, capital availability, and growth strategy. We’ll cut through the noise, kill the vanity metrics, and get tactical about what actually matters when evaluating burn.
Preface: this essay is focused on companies that have raised institutional capital and are aiming for venture-scale returns. Bootstrapped companies shouldn’t burn cash—that goes without saying. This essay can be controversial depending on your relative risk tolerance. I've found that companies that have strong exits and have maximized value post-equity financing rounds typically need to deploy meaningful capital to escape velocity. And that doesn't happen until the high-eight-figure revenue range.
Another preface: I care immensely about predictable growth and profitable growth. I care about building durable brands. Transparently, cash burn is a hard and complex topic to discuss. My goal is to help CEOs become excellent capital allocators, minimize waste, optimize for ROIC. Always.
Define “Burn”?
Before we get into benchmarks, let’s clarify what I mean by “burn.”
Burn rate = Net cash outflow from operations + CapEx, measured monthly or quarterly.
Not EBITDA. Not net income. Not “adjusted” anything. Just cold, hard cash out the door — offset by cash coming in. Think about it like this:
Burn is the gap between what you’re spending to run (and grow) the business, and what you’re collecting in real, cleared dollars.
Yes, there’s nuance — Capex for retail build-outs, inventory timing, non-cash stock comp — but if you’re a founder or CEO, your goal is to understand the actual cash burn that determines your runway.
Foundational Truths About Burn (No Matter Your Size)
No matter how big you are, a few principles hold true from my experience:
Burn is contextual: $500K/month burn might be reckless for one business and a smart investment for another. The question is always: what are you burning for?
Capital defines your margin for error: the more capital you’ve raised or have access to, the more burn you can absorb — but that doesn’t mean you should. Healthy businesses know the cost of capital and spend accordingly.
Burn has a half-life: if the same level of burn persists for 12–18 months without a path to profitability or significant inflection, that’s not a “growth investment.” That’s a slow bleed.
Now, let’s look at this by size.
What Healthy Burn Looks Like at $25M in Revenue
At $25M, you’re no longer a scrappy startup, but you’re not a scaled enterprise either. You’re usually one of two things:
A DTC-first brand trying to break into wholesale or retail, OR
An omnichannel brand still proving unit economics and operational maturity
Acceptable burn: $50K-150K/month, depending on growth strategy and margin profile.
What Makes That Burn “Healthy”?
Gross margins north of 55%+. Below that, you’re likely subsidizing growth with unscalable dollars. (This is sector-dependent, of course. Beverage is lower than skincare, for example). I wrote a detailed essay on this: link here.
Marketing efficiency under control. Blended strong MER (I like to see 3.0+); CAC payback asap and max under 3 months ideally. When it's between 3-6 months, you're constantly raising capital and it's overly dilutive. When it's 6+ months consistently without an end in-sight, we need to have a hard conversation.
Retention. LTV/CAC matters. Optimize your retention programs to ensure paid acquisition efforts are subsidized by a strong retention curve.
Inventory turning efficiently. Inventory working capital is a common sinkhole at this stage. 3-4 turns per year is a healthy target.
Burn buys you leverage. You’re investing in capabilities — talent, ops, systems — that reduce future costs or drive margin expansion.
Red Flags at $25M:
Burning >$500K/month with no line of sight to breakeven in 12-18 months
Ramping wholesale while simultaneously losing money in DTC
Lumpy CapEx (retail build-outs, systems) with unclear ROI or control / governance
Slow inventory turns leading to bloated working capital needs
Management Discussion and Boardroom Advice:
At $25M, you’re not expected to be wildly profitable. But you are expected to prove that your model scales with leverage. Show that you can bend the burn curve while growing top-line.
What Healthy Burn Looks Like at $50M+ in Revenue
This is the middle stage — where you’ve proven product-market fit, started to scale distribution, and are building out a real leadership team.
Acceptable burn: $100K–$200K/month — ideally breakeven or better if growth slows. Predictable growth is paramount, with minimal variance in budget-to-actuals. Liquidity pinch can get exacerbated at this stage — need good controls.
What Makes That Burn “Healthy”?
G&A is scaling more slowly than revenue. Your finance, ops, HR, and CX overhead shouldn’t be growing 1:1 with top-line. I want to see operating leverage
You’re getting a strong contribution margin. DTC orders cover marketing and fulfillment (plus more). Wholesale is at scale and profitable on a per-unit basis. Unit economics is paramount. We shouldn’t have any surprises here with distributors, trade spend, etc. UPSPW and velocity metrics for wholesale vector of our business should be dialed in.
You’re investing in durable growth. A new category launch, automation of ops, a retail store with a clear payback plan.
Inventory is dialed. At this stage, poor demand planning is self-inflicted. If you’re tying up $5M in aging SKUs, that’s unwise, and I recommend re-assessing asap.
Red Flags at $50M:
Still relying heavily on paid acquisition with weak LTV
Operating losses persist without a clear path to inflection
Retail channel expansion without channel profitability metrics
Hiring ahead of revenue without defined productivity benchmarks
Management Discussion and Boardroom Advice:
This is when things become real. If you’re still burning heavily at $50M, you need to prove that the investment is working — and prove it fast. This is also where debt becomes viable, so burn needs to be lender-focused.
What Healthy Burn Looks Like at $100M+ in Revenue
At $100M+, you are (or should be) a platform investment. Capital efficiency matters more than ever — not just because it’s the right thing to do, but because you’re likely being evaluated as a private equity target, a strategic roll-up candidate, or a pre IPO-ready business.
Acceptable burn: near-zero — focus on profitable (and predictable) growth.
Yes, some businesses still burn at this stage — especially if they’re growing 40–50%+ YoY — but the default expectation shifts to profitability.
What Makes That Burn “Healthy”?
Burn is tied to high-ROI growth initiatives. You’re entering new geographies and markets, investing in automation, and building a moat that increases the long-term enterprise value of the company — not just throwing bodies or dollars at the problem.
You can toggle into profitability at will. This is the “choose your own adventure” stage. If growth slows, you know how to reallocate spend and go cash flow positive within 2 quarters.
You have access to debt. And you’re managing burn within covenants or DSCR targets. You’re a credit-worthy borrower. Bank debt is readily available.
Red Flags at $100M:
Burn driven by inefficient SG&A growth — especially in HQ, exec comp, etc.
Channel conflict causing margin compression across DTC/wholesale/retail
Capital-intensive expansion into categories you don’t understand
No clarity on cash conversion cycle — leading to working capital blowouts
Management Discussion and Boardroom Advice:
At $100M, you’re either building a cash machine or pretending to. If you’re still burning, it better be because you’re chasing market dominance — and with discipline. Your unit economics and team should already be best-in-class.
My POV on Capital Structure and Burn
Burn is never just about operations. It’s also about capital structure. And your balance sheet matters a ton. The preferred liquidity stack should be solid for venture-scale companies. Access to capital should be readily available as companies are growing fast. When burn rate is being "managed well," the story arc of the business matters, alignment on unit economics as well as contribution margin creates comfort for growth and institutional investors. I've said this time and again: consumer product brands are balance sheet businesses. The stronger the balance sheet, the better the business.
If you’ve raised $30M+ in equity and sit on $15M of dry powder, you can afford a higher burn — for now.
If you’re funded via asset-based lending (ABL) or private credit, your burn must respect liquidity covenants.
If you’re bootstrapped, burn is not an option — it’s a threat.
Your burn should always be matched to your capital strategy and your risk tolerance. In the ZIRP-era, burn was a signal of ambition. Post-ZIRP, it’s a test of discipline.
You know your numbers — down to contribution margin by channel.
You know what your burn buys either growth, leverage, or time.
You know when to pivot — before the market forces you to.
If you’re not already tracking weekly cash, forecasting a 13-week runway, and modeling burn scenarios by channel and category… it’s time. Healthy burn is never an accident. It’s a philosophy — one that separates “good companies” from “great companies.”
If you can’t explain your burn, defend it, and reduce it in 60 days — you’re not in control. And if you’re not in control, someone else soon could be.