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Valuing a Business
6. Entry Cost Valuation
Rather than buy a business, you could start a similar venture from scratch. An entry cost valuation reflects what this process would cost.
6.1 To make an entry cost valuation, calculate the cost to the business of:
- Raising the necessary finance.
- Purchasing its assets.
- Developing its products.
- Recruiting and training the employees.
- Building up a customer base.
6.2 Then make a comparative assessment. Factor in any cost savings you could make. For example:
- By using better technology.
- By locating in a less expensive area.
Labels: Buying/Selling a Business
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