BBB Small Business Advice on Keeping Travel Costs Down

August 06, 2008

With high fuel prices looking like they’re here to stay now, the rise in the cost of travel means the cost of doing business for many companies will continue to put a serious squeeze on profits. Better Business Bureau is offering advice for small business owners on how to reduce travel expenses and preserve the bottom line.

According to the American Express Global Business Travel Forecast, the average cost of a domestic business trip — including airfare, lodging and car rental costs — will rise six percent by the end of 2008 to $1,110. The average cost of an international business trip will rise nearly seven percent to $3,171.

Many businesses are contending with the increase in travel costs by raising prices and cutting down on travel. The latest Small Business Research Board study found that 41 percent of the businesses surveyed have raised prices in response to the increase in fuel costs. For those businesses adjusting to an increase in fuel prices, 20 percent have already reduced business travel.

“Travel expenses are simply a part of doing business whether it’s flying to China or renting a car in St. Louis, and many small businesses are really feeling the pressure as the cost of fuel rises,” said Steve Cox, BBB spokesperson. “In highly competitive industries, raising prices might not be an option for a business and instead, management needs to look for ways to cut travel costs.”

BBB offers the following advice on how to reduce travel costs and stay in the black:

Move meetings online.
While nothing can replace the work that is achieved with a face-to-face meeting, many businesses are reducing travel costs by conducting meetings and training through video conferencing. Some businesses have been able to cut travel costs by as much as 60 percent by relying on Web-based or more traditional video conferencing systems instead of flying across the country or around the world.

While up-front set-up costs can be substantial – upwards of $350,000 for a top-of-the-line room dedicated solely to video conferencing – companies that have geographically dispersed workforces, supply chains and customers, and who are taking full advantage of these type services, are finding they can recoup the cost in as little as one year.

Establish Reduced Rate Agreements.
Many major hotel and rental car companies will offer reduced rate deals for businesses through a contractual agreement. In exchange for the lower costs, the business establishes the company as a preferred vendor. Before entering into an agreement with a specific company, the business owner should make sure that the hotel or rental car company offers the most convenient services and locations for the travel needs of the business.

Dedicate a staff member to tracking down deals.
With countless Web sites offering discounted travel, finding deals can become a full time job. While dedicating a staff member to the sole task of booking travel seems like a counter-intuitive way to save money, some companies that are spending significant amounts on travel have found that the added salary expense is indeed less than the savings. It also allows the staff to spend more time doing their own job – such as tracking down sales leads – rather than tracking down travel deals.

Eliminate the perks.
The most recent National Business Travel Association survey found that 16 percent of respondents planned to tighten their travel policies to ban or limit travel in first or business class compared to only seven percent in 2006.

Tough times call for tough measures and while a small business owner might not make any fans by limiting travel perks, it’s often necessary. Business owners should consider establishing travel policies for employees that include guidelines on booking flights, using preferred vendors and adhering to spending limits for entertainment and meals. 

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