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Business Report for Housekeeping Helen Case

Edgar Buitrago Betancourt (2220147)

University Canada West

ACCT 621: Accounting for Managers

Prof. Denny Kam

May 26, 2023

Table of Content
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s
Executive Summary....................................................................................................................3
Introduction...............................................................................................................................4
Method......................................................................................................................................5
SWOT Analysis......................................................................................................................6
Cashflow and Ratios for Helen’s Company..................................................................................7
Investment and financing options.............................................................................................10
Marketing and Advertisement..................................................................................................10
Business Structure....................................................................................................................11
Decision-Making (Recommendations)......................................................................................12
References................................................................................................................................13
Appendix/Appendices..............................................................................................................14
Appendix A -........................................................................................................................14
Appendix B-.........................................................................................................................17
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Executive Summary

Helen is a professional in Business Administration working as an executive assistant for

the director of operations in a local tech company. She is looking for advice due to two attractive

full-time job offers but, at the same time, she has always wanted to pursue entrepreneurship to

take advantage of her recent experience as a cleaner in a not-for-profit organization. Due to the

lack of time for people to clean their homes and the higher control of pathogens because of the

recent pandemic, she minds a business opportunity in that sector. Helen has done some research

identifying possible customers such as CloudBnB and gathered some numbers related to the cost

of supplies, advertisement, and website, and exploring options to acquire some assets such as a

vehicle and industrial vacuum cleaner. There is a possibility to finance her business through a

loan or a revolving line of credit from a Bank. Still, since she has never run her own business,

she is asking for recommendations about the best structure, strategy, financing, and ethical

considerations for her business plan.

Through the revision of provided information and based on the analysis conducted, a

comprehensive report outlining various aspects of the business, including financial projections,

investment decisions, marketing strategies, and general considerations for the business proposal.
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Introduction

The Canadian cleaning services market presents a great investment opportunity for

several reasons. First, due to people’s busy lifestyles in those days, the adoption of cleaning

services in both residential and commercial locations have increased with Canada’s economic

growth. Second, due to the recent pandemic, there is a growing awareness of keeping the

workplace clean for employees to protect their health and families from pathogens, viruses,

and bacteria. Thus, healthcare facilities represent a crucial business ally to offering cleaning

services market in Canada since the focus is increasingly on reducing hospital-acquired

infections through hygiene and sanitization of its infrastructure. In addition, the accelerated

construction of residential and commercial buildings will be an essential factor in helping the

growth of cleaning service companies driven by improved household income, better access to

cleaning service companies, and greater acceptance of cleaning services and cleaning in homes
(EMR, 2022)
(see Appendix A – figure A1). It is essential to mention that as more people enter

the workforce, less time is available for cleaning tasks in the home, which translates into

increased demand for cleaning services. According to a recent Grand View Research study, the

contract cleaning services market was estimated at USD 343.34 billion in 2022 and is projected

to grow at a CAGR of 6.3% from 2023 to 2030. By 2022, North America will command a

31.7% revenue share in the worldwide contract cleaning services market

(GVR Grand View Research, 2022)
(See Appendix A- Figure A2).

Regarding the competition landscape, companies specializing in cleaning services, such

as ISS Group, with its headquarters in Copenhagen, Denmark, offer Technical, security,

cleaning, and food services in Canada. It is also possible to find that Sodexo, founded in

France in 1966, offers food and catering services, technical services, energy management, and
(Bhatnagar & Nim, 2019)
facilities management throughout Canada .
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The purpose of this report is a detailed revision of the provided information about

Helen’s business idea, analyzing the pros and cons by SWOT analysis and showing its findings

to emit recommendations outlining various aspects of Helen’s business, including financial

projections, investment decisions, marketing strategies, and general business considerations.

This analysis aims to help her make an informed decision regarding the viability of her

business venture.

Method

This present report will address Helen’s business case following the following steps to

get deeper into the idea showing the risks and conveniences of the proposal:

1) Collecting data

2) Make a SWOT analysis.

3) Calculate Cashflow and Ratios

4) Evaluate Investment and financing options.

5) Marketing and Advertising strategies

6) Business Structure

7) Decision-Making
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SWOT Analysis

SWOT analysis helps entrepreneurs better understand the internal and external factors to

create strategic plans and make the right decisions by analyzing and focusing the business's

resources on four regions: Opportunities, Threats, Strengths, and Weaknesses

(Phadermrod et al., 2019).
Each region will be filled according to the model definitions of Appendix B – Table

B1.

Table 1. SWOT Analysis Helen’s Business

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Cashflow and Ratios for Helen’s Company

In this section, the following assumptions were made for the first year:

 Quantity of employee(s) will be calculated according to the required hours to complete all

services.

 Helen and her employee(s) will work 30 hours weekly for 50 weeks a year.

 Helen and her employee(s) will take two weeks off for her vacation.

 CloudBnB requires two cleaning services per week during each season.

 It is assumed that each season (summer and winter compounded by ten weeks).

Table 2. Annual Cash Inflow

Average
Total time required per
Type Cost Quantity Time per ANNUAL CASH INFLOW
year
Service
House
15units per 15units 2 hours 50 weeks
$ 60 15 units 2hours 50 weeks
cleaning for $60/hour 2 hours x x =1500
x hoursx x
week week unit year
hour week unit year
individuals
Common
Areas of 5units per 5units 4 hours 50 weeks
$ 40 5 units 4 hours 50 weeks
$40/hour 4 hours x x =1,000
x hours
x x
Residential week week unit yearhour week unit year
Building
4 clients/day
Corporate 2 hours 5 day 50 week
$ 35 2 hours 5 day 50 week
$35/hour per Five 2 hours 4x x x =2000
x hoursx x x
Cleaning day week year
hours day week year
days/week

Special 10 projects in Minimum of 16 hour $ 75 16 hour

$75/hour 10 projects x =160
10hours
projects x x =$ 12,
Projects the first year 16 hours project hour project

Flat $100 per

4 jobs in
cleaning.
$100/ summer and 4 job 3 hour 2 job 10
4 week
job $ 100 2 job 10 week
CloudBnB Varies from 1 x x x x x 2 season=$
x x480 hours x 2 s
cleaning winter in the year job week Season
year job week Season
hour to 3
first year
hours

Initial
investment $10,000 Once - - $10,000
(Helen’s
savings)

Cash
¿ 5,140 hours ¿ $ 238,000 at first year
Inflow
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 Due to each person being able to work only 1,500 hours/year, it is recommended to contract

3 employees to cover 4,500 hours. One temporary employee will cover the remaining 640

hours for special projects (160 hours) and CloudBnb (480 hours).

 Helen will manage the planning, directing and control activities. Also, she searches for new

clients, and her payment will be equivalent to her best job offer: $65,000 annually. The

earnings will be reinvested in the next year.

 It is also assumed that the tools and vehicle can be kept in the Office space rented.

 Transactions will be paid in cash and recorded on Helen’s computer in the first year.

Table 3. Annual Cash Outflow

Type Cost Frequency/Quantity ANNUAL CASH OUTFLOW

$ 500 1 kit 12 months

Supplies $500 1 per month x x =$ 6,000 / year
kit month year
Vacuum cleaner $900 Once $ 900/ year

Salary Helen $65,000 $65,000 per year $ 65,000/ year

1,500hours per year for 1,500 hour $ 16.75

Salary Helen’s Employees $16.75/hour x x 3=$ 75,375/ year
each employee year hour
Salary Temporary 640 hour $ 16.75
$16.75/hour 640hours per year x =$ 10,720/ year
employee year hour
Office space rent (utilities
$2,500 12 monthly paid/year $ 30,000/ year
included)

Website and $3,500 (One-time fee) $ 120 12 month

$120/month (Google 12 monthly paid/year x + 3500=$ 4,940 / year
Advertisement month year
adds)
Financial Advice Fee $5000 Once $ 5000/ year
Option 1: Second-hand
$18,000 Once $ 18,000/ year
vehicle purchasing

$80/month;
Option 2: Hybrid vehicle $ 80 12 month
Downpayment: 12 monthly paid/year x + 3000=$ 3,960/ year
purchasing month year
$3,000
Vehicle gas and $ 800 12 month
$800/month; 12 monthly paid/year x =$ 9,600/ year
maintenance month year
Cash Outflow with Option 1 $ 225,535/ year

Cash Outflow with Option 2 $ 219,895/ year

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Now, it is possible to calculate the Net annual cashflow:

Net annual cashflow with Second-hand vehicle purchasing (Option 1):

$ 238,000−$ 225,535=$ 12,465/ year

Net annual cashflow with Hybrid vehicle purchasing (Option 2):

$ 238,000−$ 219,895=$ 18,105/ year

With this data, it is beneficial to calculate some ratios to evaluate the convenience of investing

in this business or not, according to the initial investment.

Cost of capital Investment 10,000

Cashpayback periodoption 1= = =0.8 years≈ 10 months
Net annual cashflow 12,465

Cost of capital Investment 10,000

Cashpayback periodoption 2= = =0.55 years≈ 7 months
Net annual cashflow 18,105

Present Cashflow 12,465

Profitability Index option 1= = =1.25>1
Initial investment 10,000

Present Cashflow 18,105

Profitability Index option 2= = =1.81>1
Initial investment 10,000

Net Income 12,465

Profit Margin option 1= = =0.055=5.5 %
Sales Revenue 228,000

Net Income 18,105

Profit Margin option 2= = =0.079=7.9 %
Sales Revenue 228,000
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Investment and financing options

The bank is willing to provide two products for Helen:

7-year loan:

Total interest payable over 7 years:

$ 20,000 x 7.25 %=$ 1,450

Monthly repayment:

$ 20,000+ $ 1,450
=$ 255.35
7 years∗12 months

It means more than 3,000 per year.

Revolving line of credit:

Total interest payable annually:

$ 18,000 x 7 %=$ 1,260

Marketing and advertisement

Marketing is a process in which companies and customers build strong relationships

creating value through effective communication to provide the correct information about

products or services. In the era of the industrial revolution 4.0, online activity is crucial to get
(Sitompul & Ferawati, 2021).
customers, increase impressions and get more sales

In that sense, Helen’s idea of creating a website and boosting it through Google ads

completely aligns with actual trends. In addition, an estimated increase of customers of 25%

due to the investment in advertising might be a realistic number and completely achievable.

Appendix B Tables B2 and B3 show the impact on revenues according to the customer

increase by 25% for each type of service.

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Business Structure

Helen can choose among several business forms, such as corporations, sole-property

ships and partnerships, representing certain financial advantages and legal differences between

them. For example:

Corporation: If Helen decides to create a corporation, it can be a single owner or

multiple owners. In the legal context, her personal assets are not at risk in case of legal action

against the company. Moreover, the responsibility for debts related to the business only is

extended to the investment and taxes are recorded separately. Helen must know that establishing

and maintaining this type of association is expensive.

Proprietorship: If Helen decides to create a proprietorship, It will have a single owner.

In the legal context, her personal assets are at risk in the event of legal action against the

company, which means the owner entirely holds the responsibility for debts and taxes are

recorded according to the profits in the hands of the owner. Helen must know that establishing

and maintaining this type of association is relatively cheap.

Partnership: Another option for Helen is to create a partnership compounded by

multiple owners. In the legal context her personal assets are at risk in the event of legal action

against the company, it means the owners entirely hold the responsibility for debts, and the taxes

are recorded according to the profits in the hands of each owner. The cost to establish and

maintain this type of association is moderately expensive.

In Canada, there are more than 1.32 million active enterprises. Corporations make up more than

800,000 of these. These are overwhelmingly tiny, privately held businesses. As of February 2021,

there were just 3,289 public businesses trading on Canada's two biggest stock markets, the TSX

and TSX Venture Exchange. Even if there are not many public corporations, their value is

enormous. According to the reported market value of their shares, these 3,289 public firms were
(Burnley et al., 2022)
worth $3,477.1 billion .
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Decision-Making (Recommendations)

Using the information gathered from Table 1. SWOT analysis it is possible to develop

crucial strategies for Helen’s business, for example:

 Take advantage of market accommodation represents more than 35% of the whole B.C.

market, to focus the service cleaning offers towards that population segment.

 Due to Helen’s experience in housekeeping cleaning, she can train her employees in the

best cleaning practices to avoid injuries and damages. complaints., etc.

 Helen can improve her estimates of figures for the coming years with the support of

official statistics and trends and keep them updated to align her business objectives with

market trends.

 Take advantage of her Business Diploma to identify her stockholders, keep the people

engaged, and avoid false expectations due to exaggerated or misleading information.

According to cashflow analysis, it is highly recommended that Helen invest in her business

since she can obtain positive cash flow after seven months of operation by buying the hybrid

car for her business or after ten months if she decides to buy a used car. The profitability

index and the rest of the ratios support this affirmation.

Regarding financing options, it is advisable to take a revolving loan to pay less interest than a

7-year loan and maintain liquidity, especially in the first year.

Helen's suggestion to build and promote a website using Google advertisements is entirely

consistent with current trends. A projected 25% increase in clients because of the advertising

investment may be an achievable and realistic goal. Tables B2 and B3 in Appendix B display

the effects on revenues for each type of service due to this increase.

In the beginning, Helen can create a corporation with a single Owner. In the legal context, her

personal assets are not at risk and taxes are recorded separately (see page 11).
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References

Bhatnagar, E., & Nim, D. (2019). Impact of housekeeping services and practices on customer
satisfaction and repeat business. Prabandhan: Indian Journal of Management, 12(8).
HYPERLINK "https://doi.org/10.17010/pijom/2019/v12i8/146417"https://doi.org/10.17010/
pijom/2019/v12i8/146417

Burnley, C., Weygandt, J., Kimmel, P., & Aly, I. (2022). Financial Accounting and Managerial
Accounting (Inc. John Wiley & Sons, Ed.; Third Edition). John Wiley & Sons, Inc.
https://read.wiley.com/books/9781119904069/page/0/section/top-of-page

EMR. (2022). Canada Cleaning Services Market Outlook. Expert Market Research.

GVR Grand View Research. (2022). Contract Cleaning Services Market Size, Share & Trends Report
2023 - 2030. Market Analysis Report.

Phadermrod, B., Crowder, R. M., & Wills, G. B. (2019). Importance-Performance Analysis based
SWOT analysis. International Journal of Information Management, p. 44.
https://doi.org/10.1016/j.ijinfomgt.2016.03.009

Sitompul, D. P., & Ferawati, F. (2021). The Influence of Social Media Advertising on Purchasing
Decisions at Startup Companies. Almana : Jurnal Manajemen Dan Bisnis, 5(1).
https://doi.org/10.36555/almana.v5i1.1527
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Appendix/Appendices
Appendix A -
Figure A1

Note. Graph showing the cleaning services market by end-use. From Grand view Research
Website, Market Analysis Report 2022, Retrieved on May 21th,2023 from:
https://www.grandviewresearch.com/industry-analysis/contract-cleaning-services-market

Figure A2

Note. Graph showing the cleaning services market by region. From Grand view Research
Website, Market Analysis Report 2022, Retrieved on May 21th,2023 from:
https://www.grandviewresearch.com/industry-analysis/contract-cleaning-services-market
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Figure A3

Note. Graph showing the contract cleaning services market size, 2021 to 2030 worldwide. From
Precedence Research Website, ICT Market report published on November 2020, Retrieved on
May 21st, 2023 from: https://www.precedenceresearch.com/contract-cleaning-services-market

Figure A4

Note. Graph showing the contract cleaning services by region, 2021. From Precedence Research
Website, ICT Market report published on November 2020, Retrieved on May 21st, 2023 from:
https://www.precedenceresearch.com/contract-cleaning-services-market
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Figure A5

Note. The graph shows the accommodation sector’s share of the Tourism Revenues in 2021 in
BC. From British Columbia Website, Value of Tourism Snapshot, Retrieved on May 21st, 2023
from: https://www2.gov.bc.ca/gov/content/tourism-immigration/tourism-resources/tourism-
research
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Appendix B-

Table B1

Strengths: Correspond to advantages and

attributes (internal) which will help to get the
company’s target.
Weaknesses: Some characteristics of the business
that could hinder progress on the path to the
objective.
Opportunities: External conditions that can
conduct faster or shorten the path to the company’s
target.
Threats: Describe some hazards or risks which
can negatively impact the performance of the
company and must be controlled or minimized.

Note. The four components of SWOT in a 2 × 2 matrix. From SWOT analysis diagram in
Portuguese language. Wikipedia 2023. Retrieved on May 21th, 2023 from:
https://en.wikipedia.org/wiki/SWOT_analysis
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Table B2. Annual cash inflow with sales increased by 25%

Quantity Average
Total time required ANNUAL CASH
Type Cost (Increased by Time per
per year INFLOW
25%) Service
House
19units per 19units 2 hours 50 weeks
$ 60 19 units 2hours 50 weeks
cleaning for $60/hour 2 hours x x =1900
x hours
x x
week week unit year
hour week unit year
individuals
Common
Areas of 6units per 6 units 4 hours 50 weeks
$ 40 6 units 4 hours 50 weeks
$40/hour 4 hours x x =1,200
x hours
x x
Residential week week unit yearhour week unit year
Building
5 clients/day
Corporate 2 hours 5 day 50 week
$ 35 2 hours 5 day 50 week
$35/hour per Five 2 hours 5x x x =2,500
x hoursx x x
Cleaning day week year
hours day week year
days/week

13 projects
Special Minimum 16 hour $ 75 16 hour
$75/hour in the first 13 projects x =208
13hours
projects x x =$ 1
Projects of 16 hours project hour project
year
Flat $100
5 jobs in per
$100/ summer cleaning.
5 job 3 hour 2 job 10
5 week
job $ 100 2 job 10 week
CloudBnB cleani and winter Varies x x x x x 2 season=$
x 600
x hours x
year job week Season
year job week Season
ng in the first from 1
year hour to 3
hours
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Initial
investment $10,00
Once - - $10,000
(Helen’s 0
savings)

Cash
¿ 6,408 hours ¿ $ 295,100 at first year
Inflow

 Due to each person can work only 1,500 hours/year, it is recommended to contract four

employees to cover in total 6,000hours with Helen. Temporary employee will cover the

remaining 408hours for special projects (160hours) and CloudBnb (480hours)

Table B3. Annual cash outflow with sales increased by 25%

Type Cost Frequency/Quantity ANNUAL CASH OUTFLOW

$ 500 2 kit 12 months

Supplies $500 2 per month x x =$ 12,000 / year
kit month year
Vacuum cleaner $900 Two units $ 1,800/ year

Salary Helen $65,000 $65,000 per year $ 65,000/ year

1,500 hour $ 16.75

Salary Helen’s Employee $16.75/hour 1,500hours per year x x 4=$ 100,500/ year
year hour
Salary Temporary 408 hour $ 16.75
$16.75/hour 408hours per year x =$ 6,834 / year
employee year hour
Office space rent (utilities
$4,000 12 monthly paid/year $ 48,000 / year
included)

Website and $3,500 (One-time fee) $ 120 12 month

$120/month (Google 12 monthly paid/year x + 3500=$ 4,940 / year
Advertisement month year
adds)
Financial Advice Fee $5000 Once $ 5000/ year
Option 1: Second-hand
$18,000 Once $ 18,000/ year
vehicle purchasing
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$80/month;
Option 2: Hybrid vehicle 12 monthly $ 80 12 month
Downpayment: x + 3000=$ 3,960/ year
purchasing paid/year month year
$3,000
Vehicle gas and 12 monthly $ 800 12 month
$800/month; x =$ 9,600/ year
maintenance paid/year month year
Cash Outflow with Option 1 $ 271,674 / year

Cash Outflow with Option 2 $ 257,634 / year

Net annual cashflow (Option 1): $ 295,100−$ 271,674=$ 23,426 / year

Net annual cashflow (Option 2): $ 295,100−$ 257,364=$ 37,736 / year

Cost of capital Investment 10,000

Cashpayback periodoption 1= = =0.43 ≈ 5 months
Net annual cashflow 23,426

Cost of capital Investment 10,000

Cashpayback periodoption 2= = =0.27 ≈ 3 months
Net annual cashflow 37,736