While the perception may be that business travel is for people at big companies who work with a sizable number of customers and clients from all over the country, in reality, the opposite is true. In fact, small businesses tend to spend far more on travel and expenses than their larger counterparts.
The fact that small businesses spend more on travel than large ones should not really come as much of a surprise, as many owners know all too well that they tend to pay far higher prices for the same basic accommodations because they do not have the bargaining power that big companies do, according to the third annual Concur Expense IQ report. In fact, across all major travel spending categories, small businesses were hit with bigger price tags.
For instance, small businesses spend 25 percent more on a per-traveler basis every quarter, and also deal with a larger number of transactions, the report said. The reason for this is that accounts payable departments, and those for purchasing, typically exist at larger enterprises – defined here as those with more than 500 workers – but not at smaller ones. That means that individual employees will have to buy more for themselves and then list those purchases on expense reports, which then reflects a larger number of transactions per worker even if, in reality, employees for both large and small companies are buying more or less the same things.
Meanwhile, the total amount of money being spent can also be attributed to another fact: Small business employees will tend to have a smaller number of employees working with a potentially larger number of clients than more compartmentalized workers for larger companies, the report said. On a quarterly basis, traveling employees for small companies spent about $1,000 more than their big business counterparts, but what may be most interesting about this is that money spent on incidentals doubled over the course of a year regardless of business size. This can be attributed to the fact that most companies a traveler would have to deal with regularly, like airlines and hotels, have increased prices or begun charging more for things that used to be free, such as Internet access or baggage fees.
What can be done about these facts?
While it will certainly be more difficult for businesses with smaller payrolls to compete with larger companies in terms of negotiating better deals when it comes to the volume of people who are flying with certain airlines or staying at the same hotel chain nationwide, that doesn't mean it's not wise to try to obtain the best possible rates, the report said. Contracting the companies that workers are using most often to complete the day-to-day aspects of business travel and trying to develop a working relationship with them in some way may be a major boon to small businesses looking to save a few dollars here and there. Over the course of a year, those savings can add up considerably. Meanwhile, it might also be wise to sign up for business credit cards that will reward travel in particular, as this may likewise serve to reduce booking costs employees can face.
It might also be helpful for companies looking to save money for their bottom lines to investigate whether they're paying too much for small business insurance. It's possible that they may be able to find more affordable coverage for workers' compensation or general liability insurance and other types of policies that still meets all their various needs while saving them a bit of money along the way.