Go Slowly - Lessons From Harley Davidson

This is a continuation to my post last week on The Harley Davidson Success Story.

When William Harley and Arthur Davidson started Harley Davidson they did not have a big bankroll to support them and had to build the business one step at a time, carefully planning out how they were going to grow given their limited resources. Here is how Harley Davidson built their business slowly and what you can learn from their success:

Had No Paid Employees - Staff is usually one of the most expensive costs for a business. The Harley Davidson founders didn’t take money out of the business at the beginning and they didn’t hire people until they were able to pay for them. By not overextending themselves they were able to hire appropriately and keep the talented people they did bring on board.

Started In A Shed - Another expensive item for most companies is having a physical location. William Harley and Arthur Davidson recognized that they should keep their overhead low while building the business. The first “office” was a shed in their backyard with “Harley Davidson Motor Co.” written on the front door (seen in picture). They only expanded into a bigger building once they had the customers and revenues to justify it.

“We worked every day, Sunday included, until at least ten o’clock at night. I remember it was an event when we quit work on Christmas night at eight o’clock to attend a family reunion.”

- Walter Davidson

Reinvested Profits - As the money started coming in, the four Harley Davidson owners could have taken out big salaries. Instead they decided to reinvest their profits into making the finest motorcycles in the world. They were constantly investing into new technologies to make them the premier company in their industry. It worked. When they started there were 300 American manufacturers of motorcycles. As competitors slowed down, Harley Davidson continued reinvesting its profits and it became the sole survivor of the original 300 companies.

The #1 reason why most startup businesses fail is not because they don’t have a great idea. It’s not because they don’t love their businesses. Most startup companies fail because they run out of cash. If you build slowly, learn from your mistakes, and don’t invest too heavily on the wrong path, your chances for success rise dramatically. Many entrepreneurs invest their life’s savings (or the savings of investors / lenders) into making a quick bang in the marketplace. In business, slow and steady usually wins the race.