The High Cost of Travel Expenses for Small Businesses
Are you a small-business owner looking for ways to cut costs without affecting your long term growth? One way to trim the fat, so to speak, could be with your expenses for travel and other extras. While that isn’t to say that you should cut out everything, there may simply be a few ways you can save. American companies spent roughly $225 billion sending their employees on business trips during 2012. Business trips have supported 3.7 million jobs and have generated approximately $35 billion in tax payments. Read on to learn more about expense reports and how you can keep them on a tighter budget.
Why Does Travel Cost So Much for Small Business?
Research shows that smaller companies spend more on travel than larger companies. This is because partly because smaller companies have fewer staff members who still have to cover the same areas as those from larger companies. Small companies also tend to be more concentrated geographically, resulting in longer trips to locations that someone from a larger company’s regional office could cover with less time and money. Also, larger companies often have more sophisticated expense systems and make sure that all employees who travel follow strict guidelines.
And the research backs all of that up. In air travel, lodging and eating out, smaller businesses always outspent larger firms. In fact, small businesses spent almost 37% more on plane tickets and 24% more time on the road than larger businesses.
Ways to Tighten the Expense Policies
If you are a small business owner, it may make sense to work on limiting travel-related expenses. For starters, things like airfare can be cut back on through shopping through budget air travel sites, or by purchasing tickets several weeks in advance. You can also try to join frequent flyer programs and accumulate points so you don’t have to pay as much. While all of this can take a bit more planning, it can help you save money in the long run.
It can also be helpful to set a travel budget for the year. That way, you can work toward limiting expenses. Also, you can clarify with your employees about how much they can spend each trip.
Finally, if your company is really looking to cut back, you may have to scale back travel plans a little. This could mean skipping a conference or sending only one employee instead of two. You may also have to limit your geographic expansion for a while until you have better cash flow. Once you have more money coming in, you can then dedicate more resources to expansion elsewhere.