Small business travel is an essential part of customer face time. Without it, your small business can lose market share to larger competitors who, in the eyes of customers, are seen as being more proactive and hungry. However, as important as business travel is, it can also be extremely expensive. Your small business must be able to track its business travel expenses relative to the increased business resulting from your customer visits. Reduce your small business travel expenses, and your company has essentially improved its bottom line.
1. Track Expenditures Over Time
Any good analysis has to have a starting point. In the case of setting spending limits on business travel, your small business must be able to establish acceptable levels of expenditures for hotel & accommodations, car rentals, airfares, as well as meals & miscellaneous expenses. To do that requires the ability to track these expenditures over time and use historical data to decide upon the company’s spending limits. Start first by tracking historical trends.
2. Identify Airfare Discounts & Reward Programs
It’s essential to take advantage of discounts and promotions by joining as many reward and incentive programs as possible. Another strategy is to combine these reward programs by visiting customers during discounted travel periods. In some cases, your small business may be able to reduce its travel expenses even further by using points during discounted periods. Take advantage of these programs. In addition, insist on flying economy – especially on short flights.
3. Investigate Multiple Travel Scenarios
Your small business must be willing to investigate multiple travel scenarios. For instance, choosing a more expensive hotel closer to the customer’s location may be better than choosing a less expensive hotel further away? Why? Well, for one thing, there’s the cost of the taxi both to and from the customer's facility. However, even if your company is using a rental car, you’re still paying for gas and a daily rental rate. What are the costs of staying further away relative to the costs of gas and the car rental?
4. Implement a Daily Per Diem
When employees are either unwilling, or unable, to accommodate your company’s new limits, then your small business might need to enforce a daily Per Diem on meals & miscellaneous expenses. If your company has successfully tracked its historical trends on these travel expenses, then setting up a daily Per Diem should be relatively straight forward. For instance, assuming your company’s average daily travel expenses on meals was $75.00, then instituting a daily Per Diem lower than this would allow your company to produce significant savings, while implementing stringent cost controls.
Why is Using a Per Diem Important?
When I’ve advocated my customers implement a daily Per Diem system, a number of them have immediately brought up the concern that employees will then pocket money on their business travel. In this case, the employee would be given a daily amount to spend on meals - no more, no less. Your company guarantees it won’t have to reimburse any additional amount. In addition, your small business can periodically reduce this Per Diem as you see fit. Whether the employee saves money or not, isn’t important. What is important is how the Per Diem reduces your company’s travel expenses on meals and miscellaneous items.
Referring back to the example above, going from an average daily expenditure of $75.00 on meals, to a daily $60.00 Per Diem, is a reduction of 20%! Take that $15.00 and multiply it by the number of days your salespeople visit customers. How much saving is that? Now, do you really care what the employee does with that money?
Reducing small business travel expenses is about centralizing travel management and reducing costs. Gone are the days of always being able to fly business class and staying at the most luxurious hotels. For the most part, employees are well aware of the need to control costs and should be proactive in playing their part.
When looking to reduce your company’s travel expenses, be open to using a daily Per Diem. Investigate multiple travel scenarios. Take advantage of reduced airfare and use travel reward programs to your advantage. Last but not least, ask your employees to play a part in reducing costs. They may just surprise you with some solid ideas.
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