Figuring out whether your business travel expenses are worth it can be difficult. You don’t always have metrics that are telling you whether the money you’re spending is going to a good place or not. Fortunately, this guide is here to help.
We look at some of the ways you can work out, by proxy, whether your business travel expenses are worth the cost or whether you should find different ways to network.
It’s worth remembering that travel expenses are more than just a cost. They’re also an investment. When you meet other leaders and professionals in person, it often has a greater impact than just chatting to them online or via Slack.
Calculate the cost beyond the flights
The first place you want to start is to calculate the cost beyond the flight. You need to think about the total amount that you’re spending as a business, including on things like:
- hotels
- ride-shares
- meals
- client entertainment
You should also consider the opportunity cost of the trip. Think about the value you’ll lose when you or your employees aren’t sitting at their desk doing their regular roles. This is extra wages and labour that you’ll have to pay that aren’t recoverable. In addition to that, you’ll need to add 10-15% for unexpected costs like last-minute client dinners and taxi rides. These costs should also be factored in to tell you how much the trip is actually going to subtract from your company’s balance sheet.
Quantify the return
You next want to think about the expected return on the business trip. This is where most businesses have difficulties because it can be difficult to quantify the value of traveling or going to meet clients.
You can measure value in different ways depending on the objective of the trip.
Let’s say your trip objective is revenue generation, and you are trying to make sales and close deals. If that sounds like you, then you will need to think about the total customer lifetime value of every conversion that you make. For example, let’s say a trip costs you $2,000 but it helps you secure $50,000 in customer lifetime value. In that case, the trip is worth it even if you only win one customer.
Sometimes business trips are related to relationship building. You want to meet with teams off-site or retain your existing clients. You can also quantify leads. Let’s say losing a client costs you $20,000 a year, and that increases the chances of them staying with you in any given year by 50%. Then you’ve made at least $10,000 in additional expected revenue from that trip. The same applies if you’re visiting teams off-site. You may be able to measure their productivity with or without your visit, and then use this to quantify the value.
Finally, some business trips relate to knowledge and strategy. For example, if you go to a conference to learn something or travel somewhere to get training. These expenses are the most challenging to measure the return on investment, but you may be able to find metrics such as productivity or reduced compliance and insurance costs.
Run a virtual alternative test
You might also want to look into running a virtual alternative test. The idea here is to consider the penalty that you will experience if you do the whole meeting over Zoom. In many cases, the answer will be that there’s no penalty at all, in which case you should think about whether it’s really worth spending the money to make the trip.
In many cases, though, there will be a real cost, but it might not be as great as you think. For example, you might not build as close relationships with marketing managers from other companies, but that might not matter much if you’re pretty sure a deal with them is going to go ahead anyway.
If the only time travel is really worth it is when your physical presence changes the outcome (for example, if you can physically inspect a manufacturing plant to see if it’s operating properly or negotiate effectively in a high-stakes negotiation by being there in person), then this can really help you. Usually, you can’t have these sorts of interactions electronically
Think about how to reduce costs
At the same time as you are doing all of this, you also want to chip away at the idea that business travel always costs the same amount. In many situations, you can significantly reduce the amount that you are paying. For example, you could use cashback on your business credit cards to earn money every time you travel. This can reduce the cost significantly, depending on the membership level that you have.
You could also look for options to store your luggage in the daytime instead of automatically booking a hotel. For example, let’s say you’re going to be in a city for a few hours. Do you really need to have an overnight hotel with a bed and breakfast? Why not just store your luggage and then take the train or the flight back on the same day to save on accommodation costs?
Ultimately, it’s up to you whether you decide that business travel expenses are worth it. The business travel market is enormous, and many companies still believe in it as a valuable tool, so you should probably follow their lead.
You want to go on a business trip if it’s tied to a high-value pipeline deal, or if it means saving something critical to your company’s operations. For example, if your trip is going to result in a factory running smoothly or a deal going through, then it may be worth taking the time out of your week to go and do it physically.
It’s also a good idea to use business travel when it means you can execute a complex or hands-on project. This can involve anything from installing machinery to negotiating with different clients. If the trip is just for an introductory meeting or a standard quarterly check-in for a business that’s already going well, then the advice is generally to stay where you are.