How Ketchup King Henry Heinz Licked a Credit Crunch

Henry Heinz founded the Heinz Co. in 1869, originally selling horseradish and pickles. Then in 1875, Heinz found himself in a pickle -- a credit crisis very much like the situation facing entrepreneurs today. He went bust.

But not for long.

What he did to survive provides lessons for us today, says Harvard Business School historian Nancy Koehn.

Relating the Heinz story to the Wall Street Journal, Koehn says that after selling his parents' furniture to settle liens on his equipment, Heinz was back in business just three months later. The brilliant salesman convinced former employees to work for delayed pay, and equipment vendors to accept half of what he was paying them before in rent.

Koehn sees four lessons for modern day business folk:

"The first lesson is: Get yourself into business with very trustworthy people, because one of the reasons the (Heinz) business goes quickly bankrupt in the credit crisis is because his partners basically bail out on him.
"Second, make sure you understand what your demand is.
"Third, collect your accounts receivable quickly.
"And innovation is critical. Heinz, by bringing out ketchup and a bunch of other related products, created and fed a market."

In the full article, We've Been Here Before: How Companies Survived Earlier Economic Storms, Koehn also discusses the need for firms to do less hunkering down and more marketing.

Sean Silverthorne

Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.

More from CBS News