Your small business has to be efficient if it’s going to stay competitive in today’s marketplace. That means you carefully plan every expenditure, cutting corners where you can without sacrificing quality.
Yet, there are some necessary expenses that can be a significant financial burden on your small business. Travel tends to fall into that category.
Fortunately, thanks to technology, many of the reasons for travel from years gone by have virtually disappeared. Web conferencing, video chats, webinars, and other technologies mean that it’s much rarer to have a true need to travel. Overall, that’s been good news for small business.
Yet, there are times when it’s going to need to happen. If you’re not careful, you can spend a lot more than what’s truly necessary.
Here are some of the most costly travel mistakes your small business can make:
- Unnecessary travel. The most common source of travel cost waste for small business today is still unnecessary travel. Before you book your flight or send your employees somewhere, ask the question, “Is there a way that technology can eliminate the need for this trip?” In many cases, the answer is “yes.” Beyond the technologies mentioned above there are also VPN, online collaboration tools, and more. Don’t let travel for your small business be a matter of habit, and don’t throw away a bunch of money on a trip just because you didn’t take the time to investigate alternatives.
- Insufficient planning. Traveling for business consists of more than booking a flight, hotel, and rental car. It means doing some real research. If several employees in your business are traveling, for example, you might be able to get a group discount on hotel rooms or other amenities. Business travel should always be preceded by a great deal of digging around for the best deals.
- A lack of buy in from employees. If you’ve got employees that need to frequently travel, you need them to be on board with your ideas for travel savings. This can get a little sticky for the small business owner. Your top salesperson, for example, might routinely ignore some of the travel policies you’ve put into place. You’ve got to decide exactly what it’s worth to you to try to enforce those policies. That said, if you talk directly with the employee about the company’s financial position and about why it’s important to conserve on travel costs, chances are she’ll understand.
- Automatically going with a travel agent. Sometimes, using a travel agency can save your small business money. In some cases, they can save you a lot of money. Travel management companies have access to certain types of discounts and packages that it might be harder to find on your own. That said, if you’ve got the time and energy (or someone else on your staff does) you may be able to find better deals in-house. Devoting employee hours to this process, however, obviously has its costs.
- Making assumptions about travel. There are a number of travel biases you might have. For example, you might not realize that, for an office of 30 people, it can actually be less expensive to charter a private plane than it would be for everyone to fly commercially. You might assume that an employee retreat to Las Vegas is out of your reach, only to find out that it can be very affordable. Likewise, you might automatically assume that it’s cheaper to drive to a given destination, when in fact a flight might be very reasonable.
- Travel-related tax mistakes. There are very specific rules about what travel expenses can and can’t be written off. There are limits on meals, for example. If you’re entertaining clients, only a portion of that expense can be written off. Make sure you talk with your tax expert or accountant about what exactly can and can’t be written off, and make sure to save all of your receipts so that you can document those expenses come tax time. Missing out on tax savings from your travel expenses can add up fast.
- Falling for travel scams. There are all sorts of travel scams out there, and small businesses aren’t immune. Familiarize yourself with some of the more common scams involving taxis, currency, and even people pretending to be local police.
Travel can be a significant expense for a small business. Yet, in some cases, it’s absolutely necessary. Follow these tips to avoid making mistakes that will cost your business big.