Is Your Small Business A Tollbooth Or A Lemonade Stand?


Lately I’ve been thinking of consumer products a little differently from the continuum of goods and services. I’ve simply been imagining the economy as a network of tollbooths and lemonade stands. Tollbooths are businesses that sell access and lemonade stands are businesses that sell products.

For example, tollbooths sell us access to electricity, the gym, and the internet. Lemonade stands sell us physical products that we can take with us.

What About Services?

When we pay for a service, we pay for work. There are two kinds of service work that we pay for: physical work and mental work.

In both cases, we’re paying for access to a person or to people, so services would be tollbooths. If we were paying someone to paint our house, we would be paying for access to their physical work. If we were paying someone to consult us on how to paint our house, we would be paying for access to their knowledge.

Consider the Restaurant Industry

Instead of lumping the tollbooth and lemonade stand aspects of a restaurant into a hybrid model, I’m splitting the functions into two distinct business units .

Customers buy food and drinks (products at a lemonade stand). If they eat at the restaurant, they’ll pay for the service (access at a toll booth). A bar or club may charge a cover fee to enter (access at a toll booth).

Looking at businesses this way allows me to generate ideas on how to further monetize and optimize the tollbooth and lemonade stand separately, with a clearer perspective of what each unit does.

Consider the Music Business

Before internet, the music industry’s main business model was based on lemonade stands. Customers purchased physical albums for the information they contained.

Once music became available digitally, there wasn’t a need for the physical product. The music industry now sells access to music through streaming music subscriptions.

Live music performance is still a tollbooth business, where concert goers pay for access to the performance.

Exterior Business Design

Music is also used to advertise for other businesses, such as when you hear music in a tv commercial. Think of this as a businesses decorating their tollbooth or lemonade stand with music to make it more attractive to customers.

Music isn’t the only industry that is shifting from lemonade stands to tollbooths. A similar shift is happening in book writing, photography, and illustrating.

If art is just the communication of emotion, then as communication technology advances, art travels faster and easier along with it.

Which type of business model do you think is more lucrative today? Is one easier or more sustainable to build than the other?

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