Capital sources: The life stages of a business

Having worked out a business plan complete with financial statements, potential business owners know approximately how much they'll need to finance each step of a business. There are three basic steps to consider: seed, startup and growth.

Seed money is used for ground-floor planning. This is where you would do market research and create a business plan. Since you won't need much cash for organizing and planning the project, this step is typically self-funded.

Startup funds are used to get going in business. This total can vary greatly between companies. For example, a new restaurant would need a good deal of physical equipment and a location, either leased or purchased. A desktop publishing company may initially require only a computer, software, printer and fax. This can be self-financed, or you may want to seek a loan.

Growth financing is where the big investors come in. If you're seeking growth financing, it means you have been successful in business and want to expand. That's the story investors like to hear.