BU121 Lecture Notes - Lecture 10: Value Proposition, Purchase Order, Operating Cash Flow
Document Summary
You have to know your customer and talk to them in order to test the market if you don"t have any sales yet. Problem with focus groups: it"s easy to say yes i would by the product but not as easy to buy. An actual purchase order would be more legit. Approaches to valuation: income approach (best) Look at income and then determine a number based on that. Based on the assumption that value of business = sum of present values of any expected future benefits income stream and/or liquidity event: market approach (dece) What other businesses similar to this have been valued at. Problem: very hard to get actual comparisons. Market multiple businesses like this tend to get this number times their sales. Value is determined based on comparisons to similar companies for which values are known: cost approach (worse than decent) Value determined as measure of net cost of assets or original amount invested.
