Travel costs and discretionary expenses: How much can we justify?

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indy hotel
Our hotel in Indianapolis in the city's historic Union Station - Wholesale District (National Parks Service image)

There were no eureka moments or epiphanies during our week in Chicago and Indianapolis. And the travel was costly, financially. Even though I travelled with my wife on points, and had a media pass for the Society for Marketing Professional Service (SMPS) conference in Indianapolis, there were costs: Six nights in hotel rooms, many “eating out” meals, parking, and rental car fees. I still ┬áneed to calculate all the costs, but it looks like they eventually will reach about $2,500 CDN. Under the guidelines that overhead/discretionary costs should have a 7x return on investment to be justified, this suggests I would need to demonstrate $17,500 in economic value to validate the travel. (If I had to pay full price for the airline travel and pay the $1,000 conference fees, I expect the break-even point for value would be $35,000.)

I recall who originally told me about the 7x discretionary expense concept; an uncertified accountant/business manager who I met during a business crisis in 2006/07, and will research the source more carefully. (Michael Stone resolved an earlier post where I described the ideal “revenue per employee yield at three employees — he said it was his research a quarter century ago, published on pages 109 to 112 in the book Markup and Profit: A Contractor’s Guide. “They are still valid today,” he wrote in an email to me.)

If you break down the 7x figure you come up with approximately 15 per cent of revenue; and if you think that an average business would be quite happy with a 15 per cent profit, the 7x discretionary expense value rate begins to make some sense.

Well, sometimes travel like this can generate $17,500 (or $35,000) in direct revenue, but it’s going to be a push to prove that return, so I’ll need to be content with the more subtle advantages, and appreciate that under our current company policies, I’ll be paying all the costs of this trip out of personal resources, and will simply (and quite legitimately) claim it as tax-deductible business travel experience. (We will leave out the wonderful moments I had with my wife and the artistic and cultural experiences, especially the Art Institute of Chicago, for which we are not claiming tax savings but rightfully could describe as ‘priceless.’)

That said, there were some takeaways and real insights, which I’ll share in the next week. I learned some new online marketing techniques and resources gained a better perspective of how you can connect more effectively to the future in developing your marketing and (most importantly) was reminded of the importance of developing interdisciplinary relationships and connecting these with your primary skills and passions to achieve effective results.

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