How to power your cash flow throughout the business growth cycle

What is a business growth cycle?

A business growth cycle is the multi-phase progression every business goes through from launch to maturity, including periods of rapid growth and even times when growth is more challenging.

The business growth cycle typically consists of six phases:

1. Driving initial sales and revenue
2. Increased spending to get established
3. Covering short-term gaps
4. Funding big moves
5. Scaling up and growing the business
6. Continuing to grow your revenue

At every stage, flexible funding can be essential to progress. As the saying goes, “It takes money to make money.” Whether you’re opening a brick-and-mortar after running solely online or scaling your business to get to the next level, you’ll need cash to fuel each stage of your business.

Why is flexible funding important to business growth?

Let’s start at phase one: fueling your initial sales and revenue. When you begin selling products and services, you’ve already invested time and money into developing them. You’ve created a storefront—online or physically — in which to sell them and started marketing to attract those customers. Finally, you’ve delivered your products or services to the customers who’ve found your business.

It takes cash to make all those steps a reality, but how can a business establish a cash flow before revenue is steady? For many business owners, that initial cash flow comes from their own pockets.

However, this is not always sustainable for long-term growth. In fact, according to the business mentoring organization SCORE, 82% of small businesses fail due to cash flow problems.¹ This is where funding comes in handy to build up your cash flow.

As you reach phase two of the business growth cycle, business debit cards can be invaluable tools. Typically, business debit cards draw on sales you receive from customers. These cards can help cover both short- and long-term capital needs, like one-time inventory purchases or recurring payments for shipping contracts.

How can businesses cover short-term cash flow gaps?

In phase three of the business growth cycle, businesses may experience a “quiet period” with a slower cash flow. To power through this phase, you’ll need a plan to meet short-term financial needs, such as buying inventory, paying for advertising, and meeting payroll.

Working capital loans can be a fast and flexible way to bridge brief cash flow gaps. Speedy application processes, decisions based primarily on business history, and nearly instant access to funds, if approved, can help maintain cash flow during lean periods.

In addition, a working capital loan with repayment flexibility may allow you to adjust based on your sales—paying off loans faster during prosperous times while maintaining peace of mind during leaner periods.

See how Sweet Auburn Bread Company uses PayPal Working Capital for dough to help them grow.

Maintaining a steady cash flow for long-term business growth

In phase four of the business growth cycle, you’re ready to make big moves. When your business has matured past short-term cash flow issues, it’s stable enough for the next stage of growth. Perhaps you’ve thought about expanding into a new location or upgrading equipment to amp production. Maybe you want to invest in R&D or launch new line extension products or services.

Now may be a good time to invest in your business's future with confidence. Business loans designed specifically for small businesses can help you achieve your long-term growth goals. Look for options that offer quick application processes, accessible eligibility requirements, and fast funding. Choose repayment terms that work best for your business model—predictable, no surprises—perfect for growing businesses.

In phase five of the business growth cycle, various financial supports can contribute to your success as you continue scaling up. Software subscriptions for employee management needs, inventory increases for holiday sales or hiring new staff members like social media managers or bookkeepers require reliable cash flow to execute with confidence.

Planning for continued business growth

You enter phase six as your business's financial situation becomes more stable. This phase represents the continuation of the business growth cycle. In this stage, revenue grows and profits increase. This is your opportunity to reinvest those profits to create new opportunities, expand into new territories or offerings, and serve even more customers.

The more your business's financial profile improves, the more flexible funding you may qualify for. You’ll also likely have a better grasp of your business’s financials, from typical expenses to expected revenue. Understanding the “big picture” of your cash flow can help you plan more proactively for any seasonal lulls in business activity and even for unexpected disruptions.