We’re having an internal business discussion about a requested travel allocation for our key sales representative to attend an out-of-town trade show. He’s met the first criteria: He has sufficient booked and probable sales from the expedition.
The next question is the travel cost.
He submitted his proposal for conventional (not luxury) hotels and a business class train trip from his home, plus some food and incidentals. Nothing too unreasonable. (Business class train is about the same as economy class on a plane.)
Yet I’m pushing back — as is our company’s unofficial treasurer/budget manager. She asks:”Do we have the cash flow for the trip?” ?I asked: “Is this frugal enough?”
I then demonstrated how I keep travel costs under control. (Under our current circumstances, as CEO, I have decided that unless there is explicit staff committee approval, if I want to travel on business, I can do it, but need to cover the costs personally — crediting them to the shareholder loan account.) In other words, I need to use my own real (but fortunately before-tax) cash to pay for the travel.
So on recent trips I’ve combined airline points, freebies and reimbursements, AirBNB and municipal transport (the bus or train rather than taxis) to boil down costs to about 40 per cent of what I would pay otherwise. This doesn’t mean absurd discomfort — we have reasonable expectations of a private bathroom, a clean place to stay, and a travelling schedule that allows reasonable rest and recovery time. But if you are travelling alone, without too much baggage, and without extreme scheduling conflicts, does it not make sense to use a $3.25 city bus instead of a $75 taxi to get from the airport to the city centre?
This frugal travel management policy can, if we work at it a bit, be applied to our marketing, business development and overall operating expenses.
To proceed. . .
Set a budget and rules
This can be done in the annual planning meeting. Especially for advertising, website maintenance, and shows/events, you probably have data from previous years. This can be a starting point. You’ll then want to review the return and reward for the activities and decide if they are truly needed. “Rules” can (should!) include minimum expected?ROI for any expense, especially discretionary extras.
Have a small committee/review system for any expense
Here, the “bean counter” comes in to keep everyone honest. Is the expense really necessary? Does it follow policy? If there are exceptions — and there should be from time to time — these should be discussed and cleared. Note the committee should be very small. In our case, it is two people other than the person seeking the expense authorization. We don’t burden the process with bureaucracy.
Keep your mind open to alternative and less expensive models
Are you paying top dollar for your ISP or website management; do you go to shows because “we’ve always gone to them” and the like? AirBNB and Uber certainly have places now in business travel; and yes, as I’ve noted, there are times when the city bus will be perfectly adequate.
Frugality doesn’t mean starvation. It means keeping a lid on waste and questioning expenses. If you do this, you’ll have more money to build the business the way you want it to go.
Do you have your own frugal ideas — or stories where attempted frugality backfired and ended up being costly. Please feel free to comment, or email buckshon@constructionmarketingideas.com.
