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case study

Costin Paving & Contracting Ltd.’s Bill CostinGerald Baker

THE CHALLENGE

Bill Costin took a major detour in in his professional life when, in 1987, he quit his job as the general manager of the Newfoundland Symphony Orchestra and moved back to Amherst, N.S., to take over the family paving and contracting business, Costin Paving & Contracting Ltd., because of his father's failing health.

With no business skills, he knew he had set himself up for a huge challenge.

One of the first issues he confronted as the new boss was how to get his team accustomed to his hands-off style of managing, which was quite different than his father's hands-on micromanagement style.

The nine crew members were all long-time employees used to a certain style, and found it difficult to change their work habits.

Apart from this, he also surveyed the inventory of old vehicles and equipment, and realized he had to replace them if he was to keep the business going in the short term, and create a long-term career for himself.

THE BACKGROUND

Mr. Costin completed a bachelor's degree in music history and education at Mount Allison University in 1974. He soon realized that he enjoyed playing more than teaching and moved to Toronto to pursue a playing career.

In 1976, he attended a music festival in Switzerland, that led him to earn a degree in music performance at a comprehensive arts school in Germany. In 1978, he accepted a horn position with an orchestra in Germany. In 1980, he moved to St. John's and worked as principal horn player for the Newfoundland Symphony Orchestra, an instrumental music specialist in the school system and teaching part-time at Memorial University.

Mr. Costin's father had started a trucking business in 1948 after getting out of the army following the Second World War, and built the business into a profitable paving and contracting enterprise over the next four decades.

THE SOLUTION

Mr. Costin realized that his management style would require a while to take hold, but he also recognized the advantage of having a loyal and hard-working crew instead of hiring new employees.

To address this challenge, he gradually empowered employees to take on more responsibilities and groomed them to work independently.

He also put together a major plan to buy new vehicles and a new asphalt plant, financing the purchases through bank loans. No sooner had he done this than an economic slump hit, drastically affecting the business with cutbacks in both private- and public-sector spending.

He quickly educated himself to understand the business. The company he inherited did a variety of work; apart from the core paving business, it was also involved in trucking, excavating and site work, pipe work, and snow removal .

He saw that these other activities were taking the focus away from Costin's core paving competency and diluting its profitability. He changed tack and put the company's focus exclusively on paving.

The next issue was cost containment. He recognized that he had to squeeze the most from every contract that he could get in those lean times. He carefully identified costs and developed an elaborate system of recording and tracking them. This allowed him to provide competitive estimates at low margins, which helped to keep the business afloat.

THE RESULT

Mr. Costin's hard work and dedication to the family business has seen it not only survive the last two economic downturns but grow tenfold since 1987.

The company now employs 27 full-time staff and has a comfortable share of the growing regional market

Mr. Costin continues to keep a close eye on costs, recently shifting from fuel oil to natural gas for running Costin's asphalt plant, investing in a new asphalt plant computer-controlled blending system, allowing for a more consistent and efficient blending of material, and hiring a U.S. consulting firm to help audit and develop a comprehensive management manual for his business.

As company president, Mr. Costin is now looking at succession planning. Neither of his two children – a son articling with a Maritime law firm and a daughter completing a business degree – has expressed a serious interest in the business, but Mr. Costin is keeping all options open as he works on plans to hand over the reins of his second-generation family business.

Special to The Globe and Mail

Nauman Farooqi is a professor and head of the department of commerce in the Ron Joyce Centre for Business Studiesof Mount Allison University.

This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Report on Small Business website.

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