Housekeeping Ethan After graduating from a diploma of business administration in Vancouver, Ethan got hired as an executive assistant to Fred, the director of operations at a local tech company. He has been working at the job for the past three months. His role includes scheduling and attending meetings, sending emails, and booking travel and entertainment for visitors to the company headquarters in Vancouver. He works part-time 5 days a week from 8 am to noon and is paid about $30,000 a year. During his free time, Ethan volunteers as a cleaner for a not-for-profit organization called Keeping It Clean. The organization supports people with mental and physical disabilities by helping to keep their homes clean. The organization is run by donations made possible by large corporate donors and community partners, as well as volunteers like Ethan .

Although he enjoys the hustle and bustle of the corporate environment, Ethan feels much more satisfied by his volunteer work with Keeping It Clean. Sensing that he may not be happy, Fred has offered Ethan a full-time position with the company, upping his salary to $65,000 per year plus benefits. At the same time, due to his enthusiasm and great effort at Keeping It Clean, the President of the non-for-profit organization has offered his a position as Head Coordinator. This position would entail working more complex jobs and scheduling/coordinating the others volunteers within the organization.

Even though Ethan is excited about both offers, he has always wanted to pursue entrepreneurship. Hence, he is contemplating starting his own cleaning business. To kick things off, he has done some research and gathered some numbers. Admittedly, accounting was his worst subject in his diploma, so he is seeking your help in analyzing his options.

Ethan sees a trend of individuals getting busier, and consequently, lacking the time or energy to keep their homes clean and organized. With his home cleaning/organizing business, he could help people maintain tidy and organized homes. Also, due to the pandemic, corporations and larger residential complexes are seeking more frequent cleaning in an effort to reduce pathogens, viruses, and bacteria. With the help of his parents, Ethan has saved $7,500 to invest in his business.

If he were to start his own housekeeping business, Ethan forecasts these figures: Type Cost Frequency Average Time Tasks House cleaning for individuals $60/hour Once a week 2 hours General Housekeeping, dusting, bathrooms, kitchen deep scrub, mopping floors, and vacuuming. Common Areas of Residential Building $40/hour Twice a week 4 hours Vacuuming hallways, spraying down windows and doors, cleaning walls and floor of elevators, cleaning gym or common facilities in apartment buildings. Corporate Cleaning $35/hour Five days a week 2 hours Daily dusting and cleaning floors, cleaning surfaces, and restocking supplies and emptying trash cans. Cleaning individual offices, restrooms, break rooms, and common areas. Special Projects $75/hour As needed, likely once a season Minimum of 16 hours (usually spread across a weekend) Specialized cleaning or organizing projects, such as deep cleaning carpets or organizing files. CloudBnB $100 per job High frequency during tourism seasons winter and summer Flat $100 per cleaning. Varies from 1 hour to 3 hours Vacation short term rental properties that need to be cleaned between stays.

For the CloudBnB, Ethan plans to find short-term rental property owners in the local vicinity and directly market his cleaning services. He has seen job postings for CloudBnBs located in Whistler. Although these would be a bit far to travel to from his home in Coquitlam, they could offer lucrative opportunities to generate sizeable profits. However, Ethan is aware that CloudBnB rentals depend on tourism and usually spike in the winter for ski season and the summer for hiking.

Ethan estimates that, based on his existing connections and some word of mouth marketing, he can generate some quick success in his first year. He believes he can book 15 individual houses on a weekly basis, 5 residential buildings, 4 corporate cleaning clients, 10 special projects, and 4 consistent CloudBnB contracts in the summer and winter. He informs you his ideal workweek includes 30 hours of work (including commuting). He wants to continue volunteering one day a week with Keeping It Clean. He is wondering about his companys service mix and how it can be used to maximize revenues in relation to the work hours invested. He is also wondering if its better to charge per hour or on a per project basis.

To get his business started, Ethan will need about $500 in supplies including gloves, masks, cleaning material, dusters, garbage bags, liquid bleach, and the like. He will likely need to replenish these supplies once a month. He currently uses public transport but wants to purchase a gas vehicle to drive to and from various places and to help carry his supplies. He is thinking about doing a pros and cons analysis of purchasing versus leasing a vehicle. He has found a 2019 used car on sale for $17,500 but he is also looking at maybe leasing a hybrid vehicle from the dealership for $80 a month at 6.99% interest with $3,000 as a down payment. He thinks this car will last him 5 years.

Ethan is also planning to purchase an industrial vacuum cleaner for $900. Hes unsure whether this and the vehicle would be recognized on the balance sheet or the income statement.

Ethan is looking into different methods of advertising to boost sales and believes the best method is to start a website. He has a friend, Toto, who is a tech wiz and is willing to help create and host a website for a one-time fee of $3,300. He plans on boosting his website through Google Ads and anticipates it will cost $120 per month to boost. With the additional investment in advertising, Ethan expects the number of customers to increase by 25% for each type of service. Toto has also offered to be brought on as a 33% business partner and is willing to cover the cost of creating the website and the advertising costs with Google. If Ethan bumps the partnership share to 50%, Toto will also take on the accounting tasks. Ethan is uncertain whether to accept Totos offer- he has a bachelors degree in software engineering and tends to have a stubborn personality at times.

Ethan has also spoken to the bank and it is willing to provide his with two products:

a) a 7-year loan of $20,000 at 7.25% per year requiring monthly repayments, or

b) a revolving line of credit of 18,000 at 7.00% per year

Ethan wants a detailed analysis on how much he will need to borrow and which structure is better for his. He doesnt understand the difference between a business loan and a line of credit, so an explanation of this would also help.

Since Ethan isnt great with projections and numbers, he is asking you for help in deciding if this business is lucrative enough to pursue and if he should quit his executive assistant job and/or volunteer role. He is also wondering about the importance about maintaining accurate records in general. He has never run his own business and isnt sure which business structure to implement and how to start dealing with bookkeeping. He wants some quick advice on journal entries, T-accounts, and the components of an income statement. Ethan also wants some ratio analysis, such as profitability indicators and return on investment or assets.

Ethan wants specific advice on what he should do. He wants to know if pursuing Ethan 's Housekeeping business is a good idea or if he should accept one of the this jobs offers on the table. He wants detailed advice on business strategy, financing, ethical considerations, etc. He is open to advice beyond what is discussed in the case, but it should be relevant to his situation.

If he were to start his own housekeeping business, Ethan forecasts these figures