In economic terms, money is not a factor of production because it is a resource used to acquire resources that go into producing goods. The factors of production are capital, labor, and land.
Money is needed to start a business as the questioner rightly asserts. However, it is not a factor of production. Money is used to purchase or pay for (in the case of labor) factors of production.
Capital is used to create goods or services and can make workers more productive in the manufacturing process. For example an immense piece of machinery that bends steel into shape in a car manufacturing plant is an example of a physical asset or product that was built to be used in the manufacturing process. Money was needed to buy the machine, but it is not a factor in the actual production.
Labor is the work that people perform during the production process. Laborers expend their physical, emotional, intellectual, and mental resources in the production process. They are paid a wage or salary for their efforts. However, money is not a factor of the production they are doing. Money is their payment for engaging in a factor of production.
Land is a factor of production that is not used up. It is essential to the production process because without land there is no place to have a manufacturing facility, head office, and such. Land is a fixed asset on a company’s balance sheet. Land is required as the starting point for the production process. Money is used to purchase or rent land. Nonetheless, this money is not part of the actual production process once a company is up and running.
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