First Principle: Relations are primary; space and time are derivative. . Americans are mobile and wired and ever ready to move to meet opportunity. Since the Pilgrims landed at Plymouth Rock, Americans have been migrating to what they thought might be more fertile soil. But for Scott Mooney, there was never greener grass than what he found in his home town of Ottumwa, Iowa.

Topic for discussion: What are the advantages of staying in one town all of your life?

Possible answer: Relationships, relationships, relationships. Success is never about physical location; it is always about people and ideas.

Continuity is the other huge advantage. Some achieve continuity by staying in one industry for decades but move around physically. This is another type called "bloom where you are planted."

Scott said to us, "Wouldn't it be great if everybody was rooted enough in their local community to watch all of their actions through the eyes of their own children and grandchildren? If they knew that their children and their children’s children were going to have to live with their personal actions or inactions of today, would that have an effect on how people lived their lives?"

You think about it: What would happen to you if you stuck with an idea or a place for 30 years with the continuous goal being to find your talent and develop it?

Key Idea #1: The low profile part of an industry may be the best part. Horses. Not only beautiful, sometimes temperamental and even magical. We see thoroughbreds racing at places like the Kentucky Derby or Belmont. In this episode of the show we open at the Del Mar Fairgrounds where you saw Funny Cide, Seabiscuit and even Bing Crosby, the singer, for fleeting seconds. It is a glamorous world just made for television. But the bigger part of this industry is the horse next door.

Topic for discussion: Why do we find Scott focused on this "homely" segment of the industry?

Possible answer: The segment is huge! Scott's core customers are horse lovers. They own 1-4 horses and keep them in their yards. They ride western for pleasure. There are millions more horse lovers than people involved in racing. We have noticed that "sexy businesses" do not make as much money as the dull, boring ones. We're not saying that horse lovers are boring, but we are saying they are not the high profile owners of million-dollar thoroughbreds.

You think about it: Are you spending too much time and money chasing the "sexy" part of your industry when you could do better by targeting the under-served who might appear on the surface to be less glamorous?

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Key Idea #2: Live like your customers live. Many business owners are considered lifestyle owners. For example, a person who loves surfing may own a surf shop near the beach and combine selling surf boards with spending plenty of time surfing. This is living like your customers live. Scott started selling horse equipment because he had a horse in his backyard. He has lived the life of his customers and still does.

Topic for discussion: In addition to serving customers as he wants to be served, what does Scott do to guarantee that he is staying close to customers?

Possible answers: He visits customers in person. One of the downsides to a catalog business is your customers don't walk into a shop so that you can look them in the eye. With 450,000 customers around the country, Scott could become ensconced in his data and think he is staying in touch.

In this program you saw Scott visiting Don Bright and asking many questions. This is the way small companies discover what move to make next. By seeing customers where they live, business owners can spot opportunities for product and service development.

Topic for discussion: Why does Scott worry about the type of service he is providing his customers?

Possible answers: Scott lives like his customers so he knows how they feel. They love their horses but they don't have big budgets. Many are rural folks who place a strong value on human interactions. They may live in a town where everybody knows their name. These people cannot be shuffled off to a web site with email as the only connection between them and Country Supply. They cannot be placed in voicemail hell and asked by a robot operator to make their selection by pressing numbers on the telephone key pad.

You heard Roxanne Wojan say she loves that fact that when she calls to place an order she is able to speak with a person who actually has the item in their hand or has access to the item and can describe it to her fully. The problem with any photo of a product is that it doesn't allow the customer to feel it. Tack is leather and customers want to know how it feels. Roxanne is concerned about exact sizing and can ask the operator to measure an item. Scott has always, and will always, provide ways for customers to interact with real people representing Country Supply.

You think about it: What are your customer touch points? Do they match with what your customers wants from you? When did last you go to your customer's turf and what did you learn? What did you change as a result of your visit?

Key Idea #3: Targeting is tedious. Many people dream of having thousands of customers but only a few do the work that must be done to find and win them. In the book, Good to Great, Jim Collins writes that great companies pay attention to details and no task is too tedious. Scott and Marthalee used the good-to-great strategy and didn't even realize it. They wanted to build a list and no task was too small.

Topic for discussion: Do you think Scott is naive?

Possible answers: Hearing him say that he and Marthalee hand-copied the names and phone numbers of people who were selling horses or equipment from newspapers' classified ads sounds very naive. However, he was only 22 years old when he started the process of building a mailing list.

Scott did what made sense to him at the time. He did what he could afford. Eventually he thought of buying lists from magazines and over time he learned how to find qualified names with less effort. Of course he was naive in 1984 -- but not now. Scott is a perfect example of a person who eventually learns by trial and error and he is perfectly happy with this technique. In fact, he would probably argue it is the only real way to learn.

You think about it: What tedious task needs to be done for you to move your business forward? We guarantee, it is something that no one wants to do.

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Key Idea #4: Suppliers and vendors can be your bank. The biggest benefit of "bloom where you are planted" is when you need help, there are people around who know you. Scott's grandfather and father each had a good reputation in Ottumwa. They were hard working, honest men who could be trusted. When Scott had the dream to publish a catalog, he didn't have an extra $1,000 to pay for the printing. Because the printer knew Scott's family, the printer became Scott's banker.

Topic for discussion: Why do business owners need a wide network of funding sources?

Possible answer: Because our dreams are always bigger than our pocketbook, especially if you're only 14 years old. As far as we know, Scott ran his business from the age of 14 until he was 22 without any outside funding sources. He did what most of us do; run the business from retained earnings. This means that after 8 years he had not been able to gather together enough cash to launch the catalog.

Later Scott says that money is not the solution to most problems and we agree. However, we can learn from Scott's story that all of us probably have relationships that we can depend upon when the next idea hits. And, if you don't have vendors, suppliers and/or customers who would either loan you cash or delay your payments or provide some type of assistance to help you grow, it is time to start working on establishing those relationships.

The traditional banker is a fine place to start, but we know the banker will be too conservative unless you have a pile of cash in her bank to secure a loan for a new project.

You think about it: Make a list of all people who depend upon your success for their success. When you see this list in black and white, you will be surprised. These are the people who will want to help you plan, fund and deploy your next growth idea.

Key Idea #5: All retail is not the same. Scott's experience with the first catalog taught him that catalog retailing is not the same as shopkeeping. We have studied many retailers here and the most articulate shopkeeper we know even wrote the book on it. Carol Schroeder is the founder of Orange Tree Imports based in Madison, Wisconsin and her book, Specialty Shop Retailing, is a definitive work on the subject. Studying her in action and reading her book teaches clearly what Scott experienced. The catalog retailer has different priorities from a shopkeeper.

Topic for discussion: How did Scott make the transition from shopkeeper to catalog merchant?

Possible answer: He worked at the shop during the day and started the catalog business by working at night. This was all he could do because he had no way to sustain himself if he quit the shop to start the catalog. The best part about Scott's story is he remained true blue to his original customers. He never took his eye off a market he believed needed service.

When venturing out to grow your business, what we learn from Scott is that you don't know what you will encounter. There are many unknowns. You must steel yourself while staying optimistic and deal with the realty that everything is harder than it looks. Scott kept his overhead under control and grew the catalog business by working day and night. We don't know how many years he kept the store open on Main Street as he was building his list and learning how to be a catalog merchant. What we do know is that time proved him right.

He couldn't bring the 450,000 customers he has today to his shop in Ottumwa, so he went to them.

You think about it: What would happen if you found new ways to go to your customers?

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Key Idea #6: "Pricing is an art." This is a "Scott quote." The problem is it is hard to teach art. Science we can quantify and understand and predict. Art is mysterious and hard to put our arms around.

Topic for discussion: If we can't understand pricing like Scott because it is an art, do we know his overall pricing strategy?

Possible answer: Sure. He is the price leader. According to Marketing, the textbook by Charles Lamb, Joseph Hair and Carl McDaniel, "The three basic strategies for setting a price on a good or service are price skimming, penetration pricing and status quo pricing.

They go on to explain that price skimming is what innovators often do when they bring a new product to the marketplace. Today's headlines are full of discussion about new drug prices which are high because the pharmaceutical companies have to recoup the costs associated with research and development. Any high-priced item must justify the price with some amazing benefit. For example, "this exercise equipment does the work for you. You lose weight with no effort." If the maker of this equipment could actually document this claim, he could probably launch with a price skimming strategy.

Lamb, Hair and McDaniel explain that penetration pricing is, "opposite of skimming." Penetration pricing is Scott's strategy and it works according to these authors because Scott is operating in a price-sensitive market. The company that made this strategy famous is Southwest Airlines. The wonderful aspect of penetration pricing is that it will increase the market. People who at one time could not afford to fly would take a bus or drive their cars. The last ticket we bought Southwest was from San Diego to Phoenix. One way we got a price of $29. It is a five-hour drive across a hot, dry desert, so we always fly!

Penetration pricing by Vietnamese manicure and pedicure salons has increased that market by leaps and bounds in the USA. Twenty years ago, only wealthy women routinely had manicures and pedicures. While the old shops still charge as much as $25 for a manicure and $45 for a pedicure, at a shop owned by a new American from Vietnam, the price is as low as $28 for both! Today millions of "pink-collar" workers and school teachers make the weekly or biweekly trek to have a manicure and a pedicure.

We don't know for sure if Scott's low prices have actually created new horse lovers because Country Supply makes owning a horse more affordable, but we know that he receives fan mail from customers like this:

"I am a 13 year-old with the sweetest Arab mare that we got from the Heart 4 Horses Rescue. I am luckier than most 13 year olds. I get a fair-sized allowance and my own checking account. Everything I buy is for my horse. I am here to say, thank you so much for making ownership more affordable!"

"With All Due Respect, The Country Supply Kid, Alesia and the Country Supply Horse, Rosy" .

Topic for discussion: Why would Scott or any small business set out to be the price leader when historically only big companies can make this work?

Possible answer: Remember that Scott's goal is to serve customers who live as he does. His passion has always been to find the best prices for himself and every horse lover who has to be on a budget. Scott was never lured into serving the high-end users although we heard Roxanne Wojan ask Scott to carry more English riding gear. Our guess is that if Scott can find the gear at low prices, Roxanne will see it in the catalog.

You think about it: Does your pricing strategy grow the marketplace? Do you want it to? Would it be interesting to investigate offering a price leading product or service as a loss leader?*

*A footnote of thanks: Our guests and visitors are all so helpful. We specially thank Jim Lorenz, founder of the Focused Investor for catching our typos and grammatical errors then taking his time to tell us. Thanks, Jim.

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Key Idea #7: Help people find their gifts. Scott and Marthlee are home schooling their children. It is easy for them to see that each child is uniquely gifted. The old nature vs. nurture argument continues but with three children with the same parents and the same nurturing, it is clear to these parents: people are different!

Topic for discussion: What is Scott's philosophy about employee training?

Possible answer: He said you can't teach every person to be good on the telephone. Therefore, you can't teach every person to be good at any one thing. People have natural talents and abilities and should be allowed to shine by spending their time on doing what is naturally easy for them. Yes, we said easy. Work should not be so hard that a person is constantly stressed. This doesn't mean employees shouldn't learn and stretch and grow to learn more. It simply means, people excel by polishing their strengths not by worrying about their weaknesses.

In dire circumstances, each of us could probably do any job that we had to do to put food on the table. But, for the long term, no one should be stuck in a job that doesn't have a natural flow for them. Scott had as many as 80 employees at one time and they thanked him for helping them find the job for which they are most suited. This philosophy is not understood deeply enough, especially in big business.

You think about it: What can you do to apply this philosophy to your workplace? Do you believe that the people in your organization are well-matched to the job you ask them to do?

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Key Idea #8 - The Lightbulb: Authenticity generates energy. With Scott, what you see is what you get. If you spend any time with him, what you hear is from the heart. He has no hidden agendas, no pretensions and no ambition that is not fully displayed for all to see.

Topic for discussion: Why is authenticity hard to achieve?

Possible answer: Most people are swept up in concern about what other people think and what other people are doing. Too much time is spent posturing, maneuvering and spinning. All of this activity drains off energy but Scott is simply not deflected by others off of his own path. We find that many small business owners are like Scott which is why these people are our closest friends.

Some might argue that Scott is hard-headed. To those who aren't clear about what is important to them, a person who is clear can seem narrow and naive. There's that word again: naive. Scott would agree that he knows what is important to him and if others think he's uninformed or unsophisticated, that's fine with him. We find this style original and fresh.

You think about it: What is robbing you of energy? Do you feel your actions and words align with what is truly important to you?

Key Idea #9: Too much success can be crushing. Scott and Marthalee poured their retained earnings into marketing. This finally resulted in thousands of happy customers which meant the need for supply increased. These two are such hard workers, they just kept adding to their plate all the aspects of the supply chain.

Topic for discussion: What discovery did Scott and Marthalee make in 1999?

Possible answer: Scott said they were spending so much time taking orders, manufacturing, packing and shipping orders that they had, "lost the focus on the customer."

Topic for discussion: How did they solve their problem?

Possible answer: They outsourced every function except for marketing. As we have said here in the past, do what you do the best and outsource the rest. In urban areas we often see small business owners start and grow a business with this strategy as there are plenty of resources handy. We feel that Scott thought, as he grew, that he couldn't control the supply chain from Ottumwa and all the resources were not so readily available. And remember, this was before email!

Think about it: Can you bring back the joy of work by getting rid of the tasks you and your team are not well-suited to?

Key Idea #10: A bad trend can be good for you. The dot-com boom and build up created what soon became a glut of fulfillment houses because thought leaders were saying consumers were going to buy everything including toilet paper online. This means that goods would have to be stored and shipped by someplace other than the retail store. Call centers and warehouses to handle these potential orders and shipping popped up everywhere. We know the rest of the story. Most consumers still buy most of what they buy the old fashioned way. We go to a store and walk down the aisles and put what we want in a basket.

Topic for discussion: When Scott set out to find a fulfillment house to take on the work of receiving and fulfilling orders, what did he discover?

Possible answer: There were so many fulfillment companies begging and bidding for his business.

Topic for discussion: What was Scott looking for from a fulfillment house?

Possible answer: The warm, friendly service he and Marthalee had used themselves to build the business. He found that at Starks Brothers Fulfillment in Louisiana, Missouri. It is a two-hour drive from Ottumwa to Starks Brothers and Scott finds he rarely has to make the trip. He is in constant communication with the leadership and so far is very happy to be back to just five employees working side-by-side a few hundred feet from his home.

Key Idea #11: Hire a CFO sooner than later. As we have learned in the past, business owners can keep up to about $3 million in annual revenue in their heads. Meaning, we can understand where our sales are coming from and where are expenses are when we are dealing with $3 million or less.

Topic for discussion: What was Scott's revenue when he decided to hire a CFO for his operation?

Possible answer: He said he was probably at about $8 million in annual sales when he hired a CFO and now admits he should have done it sooner. We business owners tend to have marketing, sales or product development as our background, so we neglect the accounting and financial infrastructure. Perhaps we think of a CFO as a high-paid CPA and that is not at all correct. While most of us depend upon a CPA for accounting systems, a CFO is more engaged in cash management and is an integral part of the visioning team.

Think about it: Is this a "what comes first the chicken or the egg question?" Check out the availability of CFOs by the hour in your community.

Key Idea #12: Money can mask problems. Is Scott crazy? Who doesn't need money to build a business?

Topic for discussion: Why did Scott say it was good that he couldn't borrow from a bank at the beginning.

Possible answer: From 1996-1999, during the dot-com boom, millions of dollars were thrown at ideas that did not turn into viable businesses. This is Scott's point: an idea is not a business. On our program, Bill Tobin said the idea for a business is just 2%. As Scott looks back, he sees all his mistakes and realizes they were made with his own small amount of money and big time commitment. He is confessing that if he had had more money at the start, he would have wasted it.

Key Idea #13: When your work is your play, time disappears. Why is it than when kids are sitting in a classroom studying a subject they don't like, the time drags? When the bell rings to dismiss the class, the kids shoot for the door with an incredible force of energy that has been building up during the course of the 50-minute class. On the playground, the same kid that was nearly asleep in class, is running to dodge a ball or put one over home plate.

Topic for discussion: Why do adults get so confused between work and play when kids can so clearly define the two?

Possible answer: We're not psychologists, but we know what we see and how we feel. Kids are honest; they don't fake it. The saddest thing in the workforce is a person who actually thinks work is work. The right thing is to have Scott's attitude that work is play.

I've read child psychologists who say that play is the work of children. So, why can't work be the play of adults? At Small Business School we say that a job is something you are doing when you would rather be doing something else. Fortunately, excellent small business owners have positioned themselves to play 24 hours a day, seven days a week. People who don't understand this concept actually think small business owners have it easy because it seems as if we can do what we want when they want to do it.

We arrived at our position through putting forth years and years of effort. And all along the way, we actually thought what looked like to others to be work was play.

Also, for more, read about the name of the show, Small Business School.