When to Go There, When Not

Although it may seem that airport hopping means
your business has really made it, it can really
cost you… in more ways than one.

I STILL REMEMBER my first big international business trip. It was exciting on so many levels. I felt like I was finally really part of the global marketplace. I’d worked years to sit in that business class seat and truly belong. Before that moment, I felt I was just acting the part.

Many other (typically, young) professionals feel the same way about flying long distances for business. They may act cool, but inside they feel like big players in the game of global commerce. And they believe that their work, measured purely by the distance they travel to conduct it, will produce positive results, because now they’re one of the guys and gals who go on the big trips.

I can tell you the very last thing on my mind during my first business trip abroad was whether it was really necessary. I was thrilled, and just assumed I needed to go. The decision to send me was made at some level above my head, and I figured that because it was made, I had to (and got to) go. As an employee, your job is to do whatever your bosses tell you to do, right? But looking back, years later, I know I didn’t really need to make that trip. I could have easily conducted those meetings via video teleconference.

The good (?) old days

In the old days of international business, when you wanted a face-to-face meeting, whether it was initial or routine, you had very few options: either you went to them, they came to you, or you met at some mutually inconvenient place elsewhere. Nowadays, however, things have changed. While not actually physically getting smaller, the business world has gotten a lot smaller. By walking into another room or making a simple phone call, we can visually connect with practically anyone in the world, certainly anyone with a cell phone or Internet connection. In fact, with services like Skype™ or others, we can even do it for FREE. With connections as convenient and affordable as these, even traditionalists conduct business the new way most of the time.

For the sake of illustration, let’s say you’re thinking about going halfway around the world for two weeks (two days of travel on both sides, and ten days of scheduled meetings, non-essential tours of your customer’s facilities, etc.). You’re probably thinking,

Of course I would love a good reason to travel abroad, and I know it would be great for my business partner and me to meet our current and prospective customers and vendors in their home country, face-to-face. But when I ran the numbers, it will cost us $30,000 in expenses to go there for two weeks. So how do I determine whether we should actually go?

Don’t worry, this won’t be a finance lesson, but let me help put things in perspective. I can’t tell you what to do, of course, but I would advise you think about these factors when making your decision.

What exactly are you trying to accomplish?

Let’s get real. You should be able to clearly state what you want as outcomes, and where numbers are involved, you should be able to calculate and defend them. Some typical goals include these:

• Scouting the market; attending a trade show or expo

• Meeting with a slate of potential partners, hires, vendors, etc.

• Negotiating a complex agreement

• Presenting your future line of products or services for input and feedback

• Selling/buying

• Sorting out problems, building trust

• Soothing hurt feelings or untangling misunderstandings

• Celebrating mutual successes

• Winding down a relationship, amicably or otherwise

• Sourcing replacements for current partners or checking out additional ones

To some extent you can put a price tag on the benefits of your trip and a percentage of success you think you’ll achieve for the more intangible goals.

Do you really need to go?

Be honest with yourself, now. Will your relationship with the customer fail, or will the deal not get done if you do not physically go? If you think the customer might not take you seriously if you don’t come in person, I’d advise you to think again. That may have been the case thirty years ago, but today, we all have access to the same technology and we really can talk face to face electronically. Depending on the size of the deal, your customer might even respect your fiscal responsibility for electing not to come in person, if the cost of the trip places significant pressure on the deal. Which leads me to my next point…

Will the benefit or profit outweigh the cost(s) of the trip?

This may have made you smirk, and I hope it did. If it stung a bit, know that you’re not alone. I know there’s a decent chance this has happened to you—when the cost of the trip wound up being more than what you earned from the deal. This is a classic entrepreneurial growing pain, and you live and learn. And in all fairness, sometimes you have to travel to learn what a bad deal you almost signed up for.

Numerous entrepreneurs, after traveling halfway across the world to do an international deal for their small business, actually lose money when the cost/benefit hashes out in the end. They realize that it actually cost them more to travel abroad than what the bottom-line profits from the deal yielded. As a rule of thumb, cost out the trip ahead of time, and if you’re not netting at least a 10-20% bottom-line profit, either find a way to do the trip more cheaply, or just don’t go.

Of course you’ll know best how to judge the intangibles. If you’re traveling to meet a potential investor who is seriously considering making a $5 million investment in your small business, I would say it’s definitely worth making the trip to shake his hand and look him in the eye.

What about the home front costs?

Here’s something else to keep in mind about weighing the cost/benefit of a business trip abroad: What is happening at your home office while you’re out of the country for a week or more? Is business being conducted as usual? If you know you’ll experience a drop in business or miss foreseeable opportunities while you’re away, you need to take that into consideration as well. Bottom line: remember that at the end of the day, businesses are in business to make money, not lose money.

The benefit of a cost/benefit focus

You’ll notice a recurring theme here centered on cost/benefit—whether the benefit you see after doing something makes its cost worth it. Cost/benefit can be analyzed to infinite levels, and while this may tip your decision-making scale regarding your next big trip, it likely won’t change the outcome if you’re a small business. That’s because it’s much easier to track cost/benefit on a small business scale.

Looking back to my first trip, I see now why so many other young professionals felt like I did. They were so excited about playing a role in the fancy-sounding global marketplace that they didn’t even notice certain details. In the process, they spent 22 hours in a cramped seat (twice!), lost luggage, stayed in a crummy hotel, and felt mostly horrible from jetlag, language fog, unidentifiable foods and unfamiliar customs. Then, just when they were getting partially adjusted, flying home and spending the next week digging out inboxes and trying to get back to normal. The glory of global business.

In the case of my first big trip, all of this really didn’t matter in the long run, because everyone got what they wanted. But I suppose it could have turned out badly too. My bosses sent me over because they could get me there and back on a budget that made the trip worth it, while a firm handshake and easy smile represented the company in person. A win-win for all, luckily.

S.G.