The churn rate measures the loss or discontinuation of a paying customer or contract, usually on a monthly basis. For B2B SaaS businesses, customer retention is critical, and tracking monthly churn is a good indication of future viability. If a company grows slower but has negative churn, they can likely survive. But if a company is growing fast and their churn is high, it indicates that the company will need to continue spending more money to replace the lost customers. Normal churn rates are typically estimated at somewhere between 7 to 10%. This may differ depending on the business, but anything significantly higher may become problematic.

Over a long period of time a high churn rate is unsustainable for a company as it impacts their profitability and market valuation.

The cash burn rate is a measure of the rate at which cash is decreasing. For early stage companies, it is important to monitor the burn rate as companies can fail when they're running out of cash and don't have enough lead time to raise a round of capital or reduce expenses.

It's important to estimate a correct cash burn rate to ensure further funding routes are prepared and organized on time.

Gross burn is the total monthly expenses plus any other cash outlays per month, and net burn is equal to the gross profit less gross burn VC funds tend to focus on net burn.

Companies with potential growth opportunities cannot capitalize on them unless they're willing to burn through a lot of cash along the way. However, the challenge for companies is to figure out the right balance between a sufficient and excessive burn rate.