It's something people here don't like talking about, but how would one accomplish the funding of a highly expensive business when they themselves don't possess a high income? It would seem that this is hardly a dream as plenty of people with low-to-no incomes have managed to get successful business running that are now worth millions to even billions. The million dollar question is.....?

For example, Biff Spoiles started an animation studio and production developing company to produce animations -- something in the ballpark of $12,000,000.00 U.S.D. -- and he had a $12K/yearly salary.

People say that one must borrow contingent on their salary. If this were true, nobody with a low or even modest salary could start a business then, but millions do it every year. For example, what if one wanted to get into the foundry business? That's massively expensive and in no way can it be affordable or tangible for anything under the millions at the least. How do poor paupers get milz?

I know, again, that people here tend to turn blind eyes on unfortunate realities, but people do make giant businesses without having giant incomes. Realistically speaking, how is this possible?

Big businesses and examples thereof would be (and their respective startup estimates):

1.Animation studio and production company (~$12,000,000.00).

2.Foundry/IC plant (~$20,000,000.00).

3.Movie studio (~$16,000,000.00).

4.Cable channel/television station/network (~$15,000,000.00)

How did Biff Spoiles get this kind of loan? How did he get a successful business with one of the latter when he would have to work his normal job for approximately 645 years to earn this?

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    Googling "Biff Spoiles" shows no results other than this question, so I've no idea who he is or what he's done. But typically, a rags-to-multi-million business is through enormous amounts of hard work and -- crucially -- incredible luck. You start small, work hard, and if you're lucky you're in the right place at the right time to ride something like a dot-com boom or are snapped up by an existing mega corporation. For every one business that does this, there will be hundreds who die on the way, or never get beyond "small family business". – TripeHound Jun 22 '17 at 7:58
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    It might be possible they work their way there over time by first starting businesses with low startup costs. These big businesses may start as freelancing, morph into small businesses and only become reorganized as big businesses over time. Also, these lines of work may be the same, closely related, loosely related or unrelated. – Patrick87 Jun 22 '17 at 11:13
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    I'm voting to close this question as off-topic because startup funding isn't a personal finance topic – NL - Apologize to Monica Jun 22 '17 at 13:55
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    Note, spiff, that this: "but people do make giant businesses without having giant incomes" is TOTALLY incorrect. Consider household name companies like Apple or MSFT. From pretty much the first day they started, when still in a garage, they had money POURING in. MSFT, as a tiny business (I mean when it was like "3 humans") was MINDBOGGLINGLY successful. the reason MSFT subsequently got investment money, to move along to become a bigger company, was Just That Simple. Your phrase "..without giant income" is just utterly incorrect, I'm afraid. – Fattie Jun 22 '17 at 15:49

There are three (or four) ways that a company can grow:

  • Raise money through debt (borrowing, selling bonds)
  • Raise money through equity (sell stock)
  • Retained earnings (net income saved from prior years)

(Crowdfunding is a relatively new (in mainstream businesses) alternative financing method where people will finance a company with the expectation that they will benefit from the product or service that they provide.)

Obviously a startup has no prior income to use, so it must either raise money through equity or debt.

People say that one must borrow contingent on their salary.

Banks lend money based on the ability to pay the loan back plus interest. For individuals, their income is their primary source of cash flow, so, yes, it is usually the determining factor in getting a loan. For a business the key factor is future cash flows. So a business will borrow money, say, to buy a new asset (like a factory) that will be used to generate cash flows in the future so that they can pay down the debt. If the bank believes that the use of the money is going to be profitable enough that they will get their money back with interest, they'll loan the money.

Equity investors are essentially the same, but since they don't get a guaranteed payback (they only get paid through non-guaranteed dividends or liquidation), their risk is higher and they are looking for higher expected returns.

So the question I'd have as a bank or equity investor is "what are you going to do with the money?" What is your business strategy? What are you going to do that will make profits in the future? Do you have a special idea or skill that you can turn into a profitable business?

(Crowdfunding would be similar - people are willing to give you money based on either the social or personal benefit of some product or service.)

So any business either starts small and grows over time (which is how the vast majority of businesses grow), or has some special idea, asset, skill, or something that would make a bank willing to take a risk on a huge loan.

I know, again, that people here tend to turn blind eyes on unfortunate realities, but people do make giant businesses without having giant incomes.

The "unfortunate reality" is that most startups fail. Which may sound bad, but also keep in mind that most startups are created by people that are OK with failing. They are people that are willing to fail 9 times with the thought that the 10th one will take off and make up for the losses of the first 9.

So I would say - if you have some great idea or skill and a viable strategy and plan to take it to market, then GO FOR IT. You don't need a huge salary to start off. You need something that you can take to market and make money. Most people (myself included) either do not have that idea or skill to go out on their own, or don't have the courage to take that kind of risk. But don't go in assuming all you need is a loan and you'll be an instant millionaire. You might, but the odds are very long.


For example, Biff Spoiles started an animation studio and production developing company to produce animations -- something in the ballpark of $12,000,000.00 U.S.D. -- and he had a $12K/yearly salary.

I have no clue what you mean, as others have mentioned.

(I'm not sure what the "12 million" refers to? Do you mean "total cost of animations created by the company in a year" or? If so, "12 million" would amount to say 5 to 20 major, brand name TV commercials, for example. Do you mean the "cost of plant" - so, for a "TV commercial production company" you mean purchasing desks, drawing pads, Porsches, and so on?)

Your specific example of a "film or TV-commercial production company" is a bad example, it's not really a "business" - that is to say, it does not rely on capital and return on capital.

The way famous "film or TV-commercial production companies" happens is precisely like this:

A young guy/girl G (perhaps a designer or filmmaker) is working, just as you say, for a menial wage at a film company. (G got that first job perhaps out of art school.) G gets a chance at doing a photo shoot, animation, or helping direct a TV commercial. G does a fantastic job. Later that year, a large important animation or commercial job arrives at the company; due to the earlier excellent result, G is allowed to work on the new one. G again he does a fantastic job. Soon, within that company, G is a highly-regarded animator or director and has attracted fame amongst colleagues and clients.

Eventually, G hears of a company (XYZ Hotel) that needs a TV ad made. (Or an animation, or whatever.)

G says to XYZ, look, you could spend $230,000 with a production company, and in reality they'd have me direct it anyway. I'm leaving to work independently, so I will do your job for only $190,000.

In a word, XYZ says "Yes" and hands over a cheque for $190,000. G spends $160,000 on the usual actors, cameramen, editing, etc, and uses 2 months of G's own time, and pockets $5000 after tax.

G then doesn't get a job for a couple months, and then gets three more in the new year. Because the commercial for XYZ was so good, XYZ gave him another couple to do, for another product line.

Eventually G has just enough money coming in that he "hires" a few freelance people for a few weeks here and there ... a cameraman, illustrator, gopher, and so on. Eventually G has enough TV ads solidly booked G can risk actually hiring long-time friend P as a producer. P spends most of her time actually bringing in more work - and it builds from there.

Eventually. You have a very busy, well-known in the industry, TV commercial production company with many staff and endless clients (example, say, http://rsafilms.com)

It might be at some point in there (say, around year three), G would like to borrow the odd million bucks to basically "help with cashflow." The answer to that is nothing more than "through business contacts, G knows a wealthy dentist/whoever who is prepared to do that."

But note carefully that at that point, G's company is already very firmly established, famous for doing 20 spectacular animations/commercials, and so on.

(Note too that 999 times out of 1000 when this happens, the money evaporates and the dentist D never sees a penny back. In that case G "apologizes".)

Only much much later once the company has many, many staff and great cashflow, could the production company actually borrow from a bank, or perhaps from "actual investors", which is more what you have in mind.


1.Animation studio and production company (~$12,000,000.00).

2.Foundry/IC plant (~$20,000,000.00).

3.Movie studio (~$16,000,000.00).

4.Cable channel/television station/network (~$15,000,000.00)

regarding your four categories. Numbers 1 and 3 are totally wrong; they do not work at all like you are asking.

indeed the very simple answer is:

........ you utterly, cannot, ever ..........

"borrow money" to start a category 1 or 3 type of business.

It's totally inconceivable.

(The only exception would be if you literally just have an extremely rich Uncle, who loans you a few million to "start an animation studio" - which would be completely whacky. Because in that example: company XYZ could not care less if you "have" an animation studio (ie: your Uncle has given you a platinum card, and you bought a building, some drawing pads, and a few dozen Macs). XYZ just couldn't care less. All they care about is your folio of work. In this example, RSA would get the job :) )

My guess is you're thinking people somehow magically go around "borrowing money" to get businesses like that started. (Your examples 1 and 3.)

The simple answer is they don't and can't - your fears are assuaged! :)

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