A run rate extrapolates current performance over a longer period. If a business earned $50,000 in revenue last month, its annual revenue run rate is $600,000. Run rates are quick and easy to understand, which makes them common in forecasting and in conversations with investors or lenders.
They are also easy to misuse. Seasonal businesses, one-off contracts, and recent price changes can make a single period unrepresentative. Run-rate drivers work best for stable lines, and should be combined with explicit growth or seasonal assumptions elsewhere.