3 Ways to Bootstrap Your Startup's Business Travel Budget
While your startup's future may depend on business travel, that future also depends on an ability to stay within a budget.
Last summer, the Global Business Travel Association reported that global spending on business travel grew 5 percent between 2014 and 2015, reaching a total of $1.2 trillion. That figure was expected to reach $1.3 trillion by the end of 2016 and grow by a steady 5.8 percent over the next five years. By 2020, it should exceed $1.6 trillion.
For most, that news comes as no surprise. New capabilities for videoconferencing, mobile collaboration, cloud access and data-sharing were supposed to reduce the need for business travel. For a long time, we were told that the internet would connect business persons as faithfully as any conference room could.
However, the continued growth in spending on business travel suggests there's still something uniquely valuable about a face-to-face meeting. When businesspeople are able to interact directly, that action eliminates common miscommunications, brings body language and emotional cues into the conversation and speeds up the transfer of ideas.
What's more, because there's no technology that can replicate the experience of an in-person meeting, the obvious conclusion is that business travel will continue to be a major enterprise expense for the foreseeable future.
But business travel, as everyone knows, is expensive. Larger companies may be able to absorb the hit, but smaller companies and startups are already struggling to cover costs. To keep up with rising travel expenses, startups will have to look for cost savings elsewhere.
Here are three ways to bootstrap your company's travel budget, to do more with less:
1. Create a comprehensive travel plan.
According to Concur Technologies, small businesses are estimated to spend 19.7 percent more on business travel than larger businesses, largely because of disorganization. Smaller companies' travel budgets often fail to account for the full cost of travel.
Luckily, though, in a survey of travel executives by ACTE, 51 percent said they hoped to introduce a “total cost of travel” approach at their organizations so they could start handling this expense from a macro perspective.
The message here? Consider all your travel costs in a consolidated way, by using an easily accessible and systemic travel policy. For example, Seagate, a data storage solutions company, has an incredibly detailed corporate travel policy housed on its website so employees can access it any time they want. When everyone travels in the same way, companies can make meaningful steps toward cost cutting.
Start by outlining policies, practices and preferences that guide how everyone in your organization approaches business travel. List out the travel and entertainment items you're willing to cover, such as airfare, client entertainment, meals and ground transportation.
2. Specify any restrictions.
Then, outline any restrictions or guidelines for booking within those categories. For instance, when it comes to booking a flight, set guidelines for the class of service to be used. If a flight is less than five hours long, for instance, you could decree that employees book economy, and for longer flights, first class.
List your preferred airline, hotel, rental car, etc., vendors, as well as the process for how to pay for these items (company card versus personal card). It's also crucial to outline any items your company won't be paying for. These might include dry-cleaning fees, parking tickets, hotel staff tips and flight cancellation fees.
Build in detailed expense-reporting guidelines to reduce the risk of fraud -- which, according to a Chrome River 2016 survey of more than 1,000 business travelers, costs U.S. businesses nearly $3 billion every year.
Be specific when you ask your business travelers for proof of payment. If employees need to be reimbursed for lodging, request they submit itemized hotel bills, as opposed to credit card statements. A statement will show the overall cost of the stay, but a room bill will break down costs, potentially revealing items your company does not cover, such as movie rentals and minibar drinks.
3. Get companywide buy-in.
You have only so much leverage to negotiate costs. But you can encourage your staffers to spend less when they travel. According to the ACTE survey, up to 84 percent of travel executives believed that achieving savings would be "a question of demand management and ensuring compliance."
That means conditioning travelers to accept tighter budgets and engineering buy-in for new travel policies. It's important for your travelers to believe in and commit to your travel plan, so ensure that any decisions or changes you make are handled transparently.
Deloitte found that millennials, especially, want to understand the "why" behind decisions, so be open and honest about certain rules -- explaining that specific guidelines are there to minimize waste. Don't be one of the 44 percent of companies that don't solicit traveler feedback. If your teammates understand why you’re trying to cut costs but also see that what you’re doing still ensures that travel is still convenient and comfortable, they will work with you rather than against you.
4. Separate "saving" from "sacrifice."
If you want to motivate your employees to reduce costs when they’re on the road, find a way to make it worth their while. Consider allowing your road warriors to keep the frequent flyer points they accrue from their trips, which they can then use for a well-deserved vacation. Or perhaps reward them for traveling under budget, with a gift card to their favorite restaurant.
Look to nontraditional bonuses, too. According to Adam Grant, author and professor at the Wharton School, “The act of giving to support programs strengthens employees’ effective commitment to their organization by enabling them to see themselves and the organization in more prosocial, caring terms.” With the right incentives, you can encourage cost-conscious travel without causing your team to feel shorted.
The future of your startup depends on your ability to travel, but its future also depends on your ability to stay within a budget. Commit to a sustainable travel policy, and you'll be putting yourself in the best position to grow.