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:

• 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.