The Two Power Plants You Need in Your Business

With a sigh of relief, I hit "save" and closed the Excel window on my computer. I had just finished putting together a complicated financial model for a client.

The client was a large electric utility headquartered in the southeastern United States. The model I had been slaving away on for weeks was for one of their coal-fired power plants, one of hundreds of similar coal plants spread across the country.

Working on that project and many others like it taught me a lot about how our power grid works. It also taught me an important concept which I've had good success in applying to businesses I coach & consult.

I'll explain it to you here because it will help you too.

In the energy industry, a coal plant is what we call a baseload power plant. Another example of a baseload plant would be a nuclear plant, or a hydroelectric plant.

Regardless of the fuel source, the idea is that baseload plants provide consistent, reliable power to the power grid. They literally keep the lights on. We owe our a large part of our quality of life to baseload power because it's what provides the steady stream of energy we need to power and heat our homes, our hospitals, and our businesses.

In short, baseload plants keep us protected and let us sleep well at night.

There is another type of power plant, however. These are called "peaker plants." The most common type of peaker plant in the United States is a natural gas plant.

Peaker plants provide, as the name implies, "peaks" of power. They're only turned on when needed, like on those insanely hot and humid summer days I experienced growing up in southeast Virginia.

Peaker plants are able to generate large surges of electricity, and quickly. When one of those insanely hot days arrives, the utility company flips a switch, the peaker plant springs to life. A delivers a surge of power races across the grid and into those hungry A/C units.

This two-pronged approach to feeding power into the power grid, using both baseload power and peaker power, is also a good strategy for growing a business.

In a business, you want both: baseload power and peaker power.

Baseload power represents your consistent cash flow. These are your daily, evergreen sales. It's a stable and reliable flow of money. It's what pays bills, pays salaries, pays taxes, and keeps the lights on.

You could grow on baseload alone, but, if you're committed to growth, and also want to an extra margin of error, then you also want to include peaker power.

In your business, peaker power represents quick surges in revenue. It's the tall spikes you see on the graph showing your monthly transactions.

Look at most successful companies and you'll see this strategy in play. The retailer Target, for example, generates baseload power by selling its merchandise almost every day of the year. At the same time, the CEO would never decide to sit out Black Friday. They count on those large spikes on the calendar for a large slice of their yearly revenue.

To use Apple as an example, baseload power represents the everyday sales of their macbooks, tablets, phones, movies, and music. Apple's peaker power is the release of their latest iPhone, an event they would never shortchange.

My advice? Find ways to add both types of revenue streams to your marketing calendar. Combine steady cash flow with tall revenue spikes. It's a solid way to power your business.