The burn rate is typically used to describe the rate at which a new

company is spending its venture capital to finance overhead before

generating positive cash flow from operations. It is a measure of negative
cash flow.
- Burn rate is a measure related to how fast a company spends its
available supply of cash.
- If companies burn cash too fast, they run the risk of running out of
money and going out of business.
- If a company doesn't burn enough cash, it might not be investing in
its future and may fall behind the competition.
- The cash flow statement includes information related to a
company's burn rate.
- Investors want to consider a company's available cash, its capital
expenditures, and its burn rate before making an investment
decision

If a company's cash burn continues over an extended period of time, then

the company is likely operating on stockholder equity funds and
borrowed capital. Investors need to pay close attention to the burn rate of
cash, particularly if the company is seeking additional capital.

If companies burn cash too fast, they run the risk of going out of
business. On the other hand, if a company burns cash too slowly, it might
be a sign that the company is not investing in its future and may fall
behind the competition. An effective management team knows how to
manage cash well.
The Bottom Line
When investor enthusiasm is high, unprofitable companies can finance
cash burn by issuing new equity shares, and shareholders might be happy
to cover the cash burn as in the case of the dotcom bubble in the late
1990s. However, when the excitement wanes, companies need to
demonstrate profitability, and if they don't, they can be at the mercy of
the credit markets.

As a result, a company with a high burn rate can find itself scurrying for
cash from banks or creditors and get trapped into accepting unfavorable
financing terms, be forced to merge, or even go bankrupt. It's important
for investors to monitor a company's available cash, its capital
expenditures, and its cash flow burn rate before making a decision to
invest.

Turn someone into a customer. The term is CAC aka Customer

Acquisition Cost.

So for example I'm here as a cookies seller. Let say the price of my
cookie is Rp.10,000 per piece. What I did first was to give away free
cookies in my friend’s office that consist of 50 peoples. I provide 100
cookies for 50 peoples who one people get two each cookies. But before
that, from 50 people not all of them eat cookies because maybe diet,
vegetarian etc. from 50 people, I get 10 repeat customers and maybe 1
customer can order more than 2 cookies. So, the marketing costs Rp.
10,000 x 100 cookies = Rp. 1,000,000, which results in ten customers.
So, the Customer Acquisition Cost is Rp 100,000