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What is a sustainable growth engine?
The concept of a sustainable growth engine was introduced by Eric Ries in his book The Lean Startup. The concept is that every company should at some point become self-sustaining, i.e., its growth should not rely in influx of new cash (e.g., from loans or investments). Instead, it should rely on organic growth. Using traditional accounting, this can be seen by examining the pro forma cash flow statement; i.e., over a period of years the cash from operations needs to be (significantly) positive, and in fact, Offtoa will diagnose the problem immediately if your company exhibits negative cash from operations. Using Ries' innovation accounting, this can be seen by assumptions becoming better understood as a company repeatedly conducts experimental cycles, and by the amount of money being spent of marketing and sales being a fixed percentage of profits from existing customers (after some period of time).
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How can I model the sticky growth engine?
