Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open.

Starting a large business with a not so large income? 
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. 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: "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!  :)