Sheila’s Construction Sheila, born and raised in Alberta, 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 Alberta 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. Sheila 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, Bruce, who grew increasingly interested in having Sheila manage the new plant. Sheila is hesitant to give up on her company so suddenly and expressed this concern to Bruce. He offered her a 4-day work week where she got Fridays off, but with a salary of $70,000 instead of $80,000. Sheila 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, Sheila works 200 days out of the year, eight hours per day. Her standard labor rate is $40 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 $30,000. As she is entering a new market, Sheila 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 $35 per hour) in the hopes of gaining market share. Sheila believes she can grow her business to her usual volume in the next year and raise her rates to $40 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. 

Sheila 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 $40 an hour this way and still work up to 1,000 hours in the first year. This approach could result in faster growth, with her reaching 2,000 hours in the second year. Of course, there would be the cost of buying into someone else’s business. Sheila wants to know if a partnership would be worthwhile if she were to pay $15,000 to buy-in. She wants a detailed pros and cons analysis of partnering up with a reputable BC-based contractor and a recommendation. Shelia wants a detailed analysis with recommendations on which career option would be best for her. While she is prioritizing long-term success, it is imperative that she earns money in the near term as she plans on buying a house in the Vancouver area. Sheila also wants some advice on how taxes work in BC and how they might apply to her situation. She wants tax impacts of her career decision, assuming she moves to BC for sure.

Another investment Sheila is considering is a new work truck. Her old Chevy is expected to last another three years with a $2,000 repair next month. Alternatively, Sheila can sell the truck as-is for $3,000 (worthless after three more years of use) and buy a used F150 for $9,000 (expected value of $3,000 at the end of three years). The new truck would be more efficient, saving Sheila an average of $100 per month on repair and fuel costs. Sheila believes she can borrow money for the new truck at an annual rate of 5%. Sheila is wondering what the pros and cons of switching trucks are, and if she should upgrade. She also wants advice on the accounting and tax treatment of a truck. On a professional level, Sheila is wondering if she has the right business management skills to run the plant. She feels as if she knows the ins and outs of the construction industry so she would be able to make the right connections and keep on the pulse of the BC residential and commercial development sectors. 

However, she wants some insight into the role of a business manager. Some tips on performance evaluation of employees and business ethics that relate to her situation would be greatly appreciated. Sheila is also concerned that she doesn’t understand numbers well enough. She wants to learn more about accounting for specific jobs, both in a sense of doing her own contract work and perhaps monitoring costs for a steel frame order. She is wondering how to deal with overhead costs accurately in a factory setting and how accounting can impact decision-making in the short and long run. Additionally, she wants to know about specific ethical standards for an accountant, as she, as plant manager, would be directly involved in hiring an accounting manager along with Bruce. Finally, Bruce emphasized the need to stay on budget at the new factory. Sheila agreed, but she didn’t fully understand what that meant. 

She wants some details on conducting budgetary analysis and how that can influence business decisions. She has some experience making personal budgets which help her save money, but she suspects it’s a whole other ball game with a factory. Advise Sheila on her career path and the current outlook of the new manufacturing plant. 

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