Question
Jenny, born and raised in Manitoba, is in the process of relocating to BC. She has been working as a contractor in the construction industry
Jenny, born and raised in Manitoba, is in the process of relocating to BC. She has been working as a contractor in the construction industry for the past five years, but believes there is more earning opportunity outside of Manitoba as the weather is often too cold and results in halted projects. However, this is more a long-term outlook as developing a new market will take time. Jenny casually mentioned to a supplier that she was considering relocating to the Vancouver region and was surprised to learn the steel frames manufacturer was in the process of opening a new assembly plant there. She met with the company's owner, Brian, who grew increasingly interested in having Jenny manage the new plant. Jenny is hesitant to give up on her company so suddenly and expressed this concern to Brian. He offered her a 4-day work week where she got Fridays off, but with a salary of $90,000 instead of $100,000. Jenny believes this can work well for her, as she would be able to work as a contractor on Fridays and Saturdays. She feels that one day a week is necessary for rest and recuperation. Typically, Jenny works 200 days out of the year, eight hours per day. Her standard labor rate is $45 per hour. She also marks up materials (including motor vehicle expenses) by 20% and bills them to the customer. In a typical year, materials add up to $35,000. As she is entering a new market, Jenny believes that her work will decline to about 1,000 hours next year. She is also planning on quoting slightly lower prices (perhaps at a rate of $40 per hour) in the hopes of gaining market share. Jenny believes she can grow her business to her usual volume in the next year and raise her rates to $45 per hour in the third year. Her hope was to reach 2,000 hours a year within five years, but that might need to change if she decides to take on the plant manager role. Jenny is wondering if maybe she should look for an opportunity to partner up with an established contractor in the Vancouver region. She believes she can continue to charge $45 an hour this way and still work up to 1,000 hours in the first year
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