A "funding round" may be something you know well: It's designed to infuse cash into your startup to get it up and running, to spur growth or to push the business in a new direction.
Unfortunately, anyone who’s ever been involved in a large funding round with multiple funders spread out across the map knows that this essential activity costs serious money, to jump from city to city. But, are there ways to raise money without depleting your checking account?
Even as the larger economy has recovered, businesses have finally begun to increase their travel spending. This growth has cascaded down all the way to the lower levels, so startup founders now feel that it’s okay to just "expense" everything and hope for the best. Unfortunately, this isn’t the case.
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As noted, the purpose of a funding round is to infuse cash -- not to deplete your resources. If you aren’t going into your funding round with this "savings" mindset, then something’s wrong. Thankfully, it’s not that difficult to curb expenses when you travel. You simply need to stay alert and to avoid falling into bad habits.
Here are a few practical suggestions:
1. Stop overspending on hotels.
One of the top things to focus on is the selection of hotel rooms and lodging. This is where you’ll either make or break the bank, so to speak. While you may want to stay in a luxury suite in the heart of downtown, there are ample savings to be gleaned from seeking out more modest accommodations.
Small savings add up when it comes to long funding rounds and weeks at a time being spent on the road. For example, say that you and your partners need two hotel rooms, for a total of 21 nights, across various cities. Saving just $25 per hotel room per night will equal savings of $1,050. That's a significant amount for a fledgling startup.
With large cities especially, finding the right hotel becomes particularly important. Since many startups make San Francisco a top destination for funding across the country, consider the Bay Area as an example. As shown by Gogobot.com, it’s easy to spend upwards of $400 per night on an average hotel room in San Francisco, if you insist on staying in the heart of downtown. However, if you’re willing to stay a few blocks away, you can reasonably find a room for under $300.
2. Consider more than price.
Also, on the topic of hotel choice, it’s important to note that nightly rates shouldn’t be the only deciding factor. You should also think about amenities and location.
With amenities, free breakfast is always a good idea. Saving a few bucks can make a big difference over the course of the trip -- especially if you have a large group. Another thing to think about is proximity to supermarkets. If you’re within walking or driving distance of a grocery store and have a kitchenette room, you can eat in for meals and reduce your expenses significantly.
3. Use rewards programs.
Now’s the time to join as many rewards programs as you can. Most hotel chains and airlines offer some sort of program, so you may as well accumulate points.
“My business saves sometimes hundreds or thousands of dollars on airfare and hotels,” business owner Ilana Greene says. “For example, I saved [only] $14.95 on Southwest last year, but I also saved similar rates on Jet Blue, United and various other airlines, which added up to roughly $2,000.”
4. Search for flights strategically.
You likely already know that the earlier you book your flight, the better deal you can get. But, just how early should you buy tickets? According to new research, you should book 57 days before departure for domestic flights and 171 days before international flights.
Aside from this rule of thumb, you should use fare-tracking apps and tools like Airfarewatchdog and Yapta. They allow you to set specific price limits and tell you when a flight falls into these zones.
5. Pack light.
Checked baggage fees add up. So, make it a priority to pack only carry-on luggage. Not only will this save you money, but it will save you rather a significant amount of time checking and picking up luggage before and after flights.
If you absolutely must check baggage, try using airlines that allow reward program members to check bags for free. This is a handy perk that you’ll want to utilize.
6. Use your own money.
Here’s a novel tip: Instead of expensing everything on business cards, use your own cash and cards, then obtain reimbursement after the trip. When you see money come out of your own account, you’re much less likely to overspend or to purchase things that you don’t need. This little psychological hack will make you more aware of your spending habits.
7. Use a travel agent.
This may seem like archaic advice in 2016, but it often makes sense to use a travel agent. Many agencies have long-term relationships with hotels, airlines and travel services and will get you better deals than you can find anywhere online.
While a travel agent will cost you some money, you have to remember that any money spent up-front will be validated in terms of savings on the backend. Very rarely will a travel agent not save you money.
How else can you cut travel expenses?
Every individual and business is unique. You may be able to save money where another startup can’t -- and vice versa. The important thing is that you identify areas where you can save, and focus on eliminating superfluous expenses that are weighing down your business.
Aside from the obvious benefit of saving money on a given funding round, instilling these positive habits in your leadership team and employees will have a positive long-term influence on the way that you approach all spending and budgeting procedures.
So, it’s time to ask yourself, “How can I cut travel expenses?”