Chandan just finished his day working as a structural engineer and called you while driving to the market to pick up an ingredient for tonight. He starts to tell you the story of his current side hustle. Chandan has been working as a structural engineer for 3 years, but the hours, his boss, and the continual stress of moving from project to project is slowly wearing him down. Chandan gets paid $64,000 a year as a structural engineer with a well-established company in British Columbia. He and his wife are currently renting a 1 bedroom apartment but will need a bigger space in the near future. Chandan mentions that he enjoys cooking and hosting parties at his home (dining room and patio) for friends and family. 

He cooks up three-course meals with desserts. At the last dinner party, his friends were telling him that the quality and presentation of his meals exceeds those of other restaurants and praised him for his talent in cooking and baking. Feeling fed up with work, Chandan wants your advice on how feasible this business venture might be. Currently, in addition to working his full-time job, he hosts 1 party per week with a maximum of 7 guests. He is considering talking to his boss to see if he can continue to manage projects part-time (reduce workload by 30%) and increase the number of dinner parties he can host. If his boss agrees, he is considering increasing to hosting three parties each weekend. Chandan understands that the restaurant business is a saturated market, but with his own personal touches and creativity, he believes that he can provide the ultimately culinary experience. Alternatively, he can quit his full-time job and focus solely on a culinary career. For marketing his services, Chandan uses his own network of friends and family to fill the dinners- he has six reservations for the next six weeks. In his view, the word-of-mouth marketing is working well, but is seeking viable alternatives. He thinks he should start advertising in the local newspaper at a cost of $120 per month to help increase awareness. He projects that the added marketing would not increase the number of parties beyond three per week, but the average party size would grow from 4.1 people to 5.6 people. For this unique dining experience, Chandan is currently charging each guest $85. He doesn’t track his time, the use of electricity, or gas for the outdoor fire pit he runs in the patio. Groceries are always hand selected by Chandan from local sources he trusts for quality. On average, each dinner costs approximately $300 in groceries. Time wise, it takes Chandan and/or his wife a total of 45 minutes for shopping, 2 hours for meal preparation, plus an additional 2.5 hours for hosting where Chandan and his wife serve food and joke with guests. Sometimes, Chandan’s wife even sings! Chandan wants to grow his operations rapidly by either buying a bigger home (the monthly mortgage expected to be approximately $2,300 per month with additional costs for electricity and gas) so that he can host more people or lease a restaurant space in a nearby shopping complex. There is a space for rent in the complex for a minimum of a two-year lease for $1,700 per month. If he decides to open the restaurant, he will require an additional chef and three staff – one to handle reservations and cash, another to clean, and one in the kitchen as a sous-chef. The rental space seems competitive so he would have to act in the next three months. Taking a tour of the place, he noted that he would need to purchase a better stove and dishwasher and invest in dishes, cutlery and chairs. He is unsure of how to account for these items and how they should be depreciated and what depreciation is. He estimates with a larger home, he could host up to 15 guests per dinner party and at the restaurant, there is a capacity of 40 people. 

Chandan anticipates that he can eventually get the dinner party average size to 11 people with the new home. With the restaurant, he hopes to eventually host 60 guests per day. Although he wants to maintain the quality and charm of his restaurant, Chandan is considering looking into cheaper meat to serve at his restaurant to reduce the cost of meat (currently about half of the grocery cost) by purchasing older ingredients located at a discount distributor (25% lower than current cost). He wants to know the impact of this on his profit margins. Chandan is wondering if his pricing makes sense. He wants a detailed break-even analysis to determine if he is on the right track and how things may change in the future. As he is budgeting to save for either the larger home or the restaurant, Chandan is also wondering how long achieving his goals may take. Chandan is worried about liquidity and wants a cash budget for the next year for whichever decision is implemented. He wants to know how much he will have to borrow when there are cash shortages and how much interest he will have to pay. Currently, Chandan has $120,000 saved up in a personal bank account earning 1.5% per year. He is expecting to use most of this money as a down payment for his new home. 

He wants your advice on how to invest these funds. A friend of Chandan’s who works in real estate, Arsh, says he want to invest in Chandan’s company. He is willing to pay $50,000 for a 50% equity stake in the business. Chandan is uncertain of whether to accept this offer or to continue on his own. Arsh is willing to pay in 4 cash installments throughout the year or upfront through a transfer to 1.6296 BitCoin to Chandan’s BitCoin wallet. Chandan doesn’t have a BitCoin wallet and doesn’t understand much about cryptocurrencies. Chandan wants to know the differences between the two payment structures. Some of his friends pay him cash for the dinners while others e-transfer him. Chandan doesn’t understand how to account for the transactions and wants some sample journal entries for how to record revenues every month and how to record expenses. Advise Chandan on his career path and the outlook of his proposed business, including any ethical implications. 

Produce a business report, including comprehensive analysis, recommendations, and any questions you may need to ask Chandan.