How Can Your Small Business Establish an Effective Travel Budget?

/How Can Your Small Business Establish an Effective Travel Budget?

How Can Your Small Business Establish an Effective Travel Budget?

Business travel is often necessary for growing companies as they look to form new client relationships and expand their consumer base. However, with rising travel costs, it may be a good idea to establish a travel budget for the employees you send on trips. After all, putting staff members on the road is an investment, one that should bring a worthwhile return into order to contribute to long-term success. So how do you know when it’s time to start limiting your employees’ travel expenses and how do you go about establishing a budget? Here are a few small business budgeting tips to guide you.

Know the state of the travel industry

If you find that your business benefits from frequent client visits, make sure that your projected costs are in line with current rates within the travel industry. According to The New York Times, the Global Business Travel Association reported that as of 2012, the number of business trips has dropped 22 percent since 2000. However, travel spending has increase 3.6 percent during the same period, pointing to the fact that everything from airline costs to hotel expenses has gone up, leaving managers with the task of doing more with less.

Sit down with your company’s leaders and develop strategies that may allow you to continue to send employees on essential trips without spending more than your business can afford. This may be as simple as establishing a tighter budget and saving trips for only your most important clients.

Set up an official travel policy

You should have a set standard for approving travel expenses. This policy should address all aspects of your employees’ business trips. For example, have a limit for daily meal costs so you’re able to closely manage how much your staff is spending while away. Another factor your policy should touch on is the approval process. Should the procedure be stricter for your junior staff members? Maybe they should have to go through an appointed manager with the required knowledge base to ensure the potential journey will yield high return on investment. 

Make use of effective technology

Smartphone applications aren’t only useful for your traveling employees – flights can easily be changed and hotels can be booked or canceled at the last minute if necessary – but they also make managing travel budgets easier for managers. For example, Mobile Commerce Daily pointed out that American Express Global Business Travel apps are frequently used by businesses to track employees’ flights, communicate with staff and provide travelers with the necessary finances if travel disruption occurs. 

"You can’t say enough about mobile technology and how an expanding and incredible amount of information is provided and available to travelers through their mobile devices and apps," Jay Campbell, the editorial director of the BTN Group, told The New York Times.

The United States Department of Transportation explained that in the U.S. alone, there were 1.2 million delayed flights and 126,984 canceled flights in 2014. Be prepared for these unexpected circumstances and don’t let them cost your company more than they have to. 

Analyze success in relation to costs

Detailed expense reports are crucial to determine an effective travel budget. Have all of your employees fill one out upon returning from each journey. Compare the costs of previous trips your business approved with the value that they added to your company in the long-run for a useful indicator of whether your travel budget is on point. This will guide you as you estimate the future of your company’s financial state and provides the opportunity to identify and learn from past mistakes. Knowing what types of trips end up paying off and which don’t will also enable you to create flexible budgets for those with better success rates.