Types of Growth Loops: The Thirty Day Test.
There are four types of growth loops, and one question reveals whether you have any. Stop all acquisition for thirty days and watch. If growth stops dead you have a funnel, but if it slows, something turns on its own.
The thirty days of silence.
So what happens if you stop marketing, posting, outreach, advertising and asking? Be honest, because nobody else will check. If growth stops dead, you are pushing a funnel. That is not a business that grows so much as one you carry. However, if it only slows, find what turns and feed it.
Four types of growth loops to compare.
First, customers bring customers by inviting them or being visible using the thing. Second, what you make accumulates, so last year's work still brings people in. Third, customer money finds more customers at a cost below their worth. Finally, revenue from sales funds more selling capacity. Each of these types of growth loops closes its own circle.
Where the loop idea comes from.
Practitioners built this framework, not researchers. The brian balfour growth loops idea appeared in 2018, defining a closed system that reinvests its output. Also, it is not a peer-reviewed construct. Jim Collins described a flywheel in 2001, but that is a metaphor. Instead, the loop describes how, which helps someone with a mixer on a table.
Name your types of growth loops tonight.
Write what would happen to sales if you stopped every acquisition activity for thirty days.
Mark which of the four shapes, if any, keeps turning without you.
From the book.
If your growth stops dead, you've got a funnel. You're pushing, and the moment you stop pushing the thing stops moving, and that isn't a business that grows so much as a business you carry.
I Want to Start a Business but I Don't Have Money, chapter 10: The growth loop
Questions about types of growth loops.
What are the four types of growth loops?
Customers bring customers, work that accumulates, customer money funding acquisition, and revenue funding more selling capacity.
Is the loop framework scientific?
No. Practitioners set it out in 2018, and the term does not appear in academic journals.
How is a loop different from a flywheel?
Collins's flywheel is a metaphor for momentum. A loop describes how that momentum is produced.
Read the whole chapter.
This lesson covers one section of chapter 10, “The growth loop”. The book goes further, with the full evidence, the stories and every exercise.
Lessons in this chapter.
- 01 Sales Funnel vs Growth Loop: Pick the Shape That Grows.
- 02 Sustainable Growth Rate Formula: Find Your Ceiling.
- 03 Reinvest Profits in Small Business: The Bedroom Rule.
- 04 Types of Growth Loops: The Thirty Day Test.
- 05 Ricardo Semler on Growth: Ask What It Is For.
- 06 Why Growth Channels Stop Working: Spot It Early.
- 07 Bootstrapping vs Venture Capital: Weigh Both Sides.