Why Delegating Business Travel is Profitable

At some point in their development, every company faces the need to organize business trips for its employees. However, there isn’t always a specialist on staff capable of handling this task, especially if the trip is to a completely unfamiliar region. At the same time, business owners or investors always raise the question of the justification for new expenses. In some cases, they can be quite significant, and no one will give an accurate guarantee of a positive result in the form of contracts, agreements, or cooperation agreements.

While the effectiveness of a trip largely depends on the competence and business qualities of the participants, delegating authority to a specialized intermediary firm helps optimize the costs of organizing it. The need for such a solution can be justified using the return on investment (ROI) coefficient.

What is ROI and How is it Calculated?

ROI (Return on Investment) is a special tool that shows the level of return on all invested funds and helps determine how profitable a project is, taking into account the investments made. The ROI coefficient is expressed as a percentage and is considered a global indicator of business profitability. Its academic formula can be simplified as follows: ROI=(𝑋−𝑌𝑌)×100ROI=(YX−Y​)×100 or ROI=(Income−InvestmentInvestment)×100ROI=(InvestmentIncome−Investment​)×100

The classic ROI is calculated solely on the available result, as it is necessary to take into account all the costs of the project and the benefits or losses already received from it.

However, according to many experts in the financial world, the return on investment coefficient is a very flexible tool. With its help, it is possible to assess (though with reservations) the benefits of delegating authority when organizing business trips.

Calculating the Potential Benefits of Delegating Trips in Terms of ROI

There are many ways to calculate the result of a business trip, but we will highlight the main ones that specialists most often rely on.

1. By analyzing the goals of the trip and their results

Calculating ROI is closely related to the outcome of a business trip, planned or received immediately. Employee business trips have different goals, the results of which can be:

• Advertising your product and entering new markets;

• Conclusion of long-term contracts;

• Expansion of the existing portfolio of orders;

• Studying the experience of competitors and getting acquainted with their products;

• Search for promising suppliers of raw materials or equipment;

• Improving the skills of employees, which will allow them to work more productively.

Each of the presented points is a guaranteed income for your company in the foreseeable future (indicator “X”), and an employee’s trip is one of the direct investments in obtaining it (indicator “Y”).

In today’s dynamic world, organizing a business trip “the old fashioned way” or “on your own” often leads to unnecessary costs. The latter, not being an investment, will unreasonably increase the value of “Y”, which will definitely lead to a decrease in the ROI indicator. TrekTender is committed to minimizing your costs and getting positive results from your business trip.

2. By the possibility of reducing costs in the approved budget

This method smoothly follows from the previous one. Before launching a new project or making major changes to an old one, the company draws up a budget of upcoming expenses. The document reflects the costs of employee business trips as a separate item. An increase in this indicator will lead to a deficit in the initially approved budget funds, which will have to be compensated for by an additional loan, a reduction in the cash fund of another project, or in another way. This situation can be expressed by the formula:

ROI=(income−costsamount of investment)×100%ROI=(amount of investmentincome−costs​)×100%

And even if the amount of investment remains the same, an increase in costs in excess of those originally envisaged in the budget will reduce the final income. It is logical that the ROI indicator in this situation will be an order of magnitude smaller. Delegating the organization of business trips to a reliable partner will help to avoid this. TrekTender specialists know how and where to save money, which will allow your company to keep costs within the budget.

3. By analyzing the ratio of the cost of the trip and the achieved result

As many economists note, analyzing the ratio of the cost of a trip and the results achieved is another way to calculate ROI. The basic formula in this case can be represented as:

ROI=(income−costscosts)×100%ROI=(costsincome−costs​)×100%

We will not “build a palisade” from its evidence, we will simply note that a sales manager’s trip to important negotiations in a crowded reserved seat car will not contribute to their success. Accommodation in a cheap hotel with a minimum of basic amenities will further worsen the employee’s KPI. As a result, such “savings” reduce both “income” and “expenses” at the same time, which will undoubtedly affect the ROI indicator. This is perfectly understood by the specialists of TrekTender. We know how to make employee trips inexpensive, but comfortable and productive.

Benefits of Delegating Business Trip Organization

Summing up, we note that using the ROI indicator as evidence, the company can receive the following benefits from delegating authority to organize business trips:

• Optimization of costs and reduction of costs for business trips;

• Reducing the cost of labor of their employees for the period of a business trip;

• Increasing the productivity and effectiveness of ITP personnel participating in a business trip;

• Increasing real profits as a result of the correct organization of the business trip process.

We foresee justified criticism of the explanation given here of the benefits of delegating authority to organize business trips. Some points are very conditional. However, based on the arguments presented in the text and using the ROI indicator obtained in various ways, you can prove your case to a higher manager, the founder of the company, or its investor. In this case, the return on investment coefficient can be a starting point and a good guide when planning further work. Remember that TrekTender specialists can take on all your international assignments and effectively complete the task.