As you know from reading out last couple of blog posts we’re listing all of our prospect rants – what brings them to us initially. Today’s is all about expenses and unfortunately most business owners don’t take into account the expenses associated with business development which ultimately leads to a much higher budget item then originally planned. Keep reading to get a greater understanding of the full budget challenges:
Rant #4 – what’s with all these expenses?
What’s with all this expense reimbursement? So Business Development is not just salary, commission, benefits and taxes…it’s also expense reimbursement and you should plan for a minimum of $30,000 if you hire someone full time. Here’s what we typically see:
- Mileage – at or near the IRS reimbursement rate, you should expect 800-1500 miles on average per month
- Memberships – some groups are $35 a year while others are $30,000, you’ll need to determine a budget and which groups fit your target profile
- Event fees – typically range from $30-400, including fees for appropriate trade shows which could be upwards of $2500
- Phone reimbursement – typically capped at a monthly number or fully paid for by the company and may be company equipment
- Parking and tolls
- Taking clients/prospects/partners out to breakfast/lunch/dinner/drinks
When I was employed in a BD role years ago, my monthly expenses averaged $1200-2000 and that didn’t include the memberships…this was also over 5 years ago. If you decide to hire full time you should plan for expenses and budget, be sure to discuss this budget with your BD staff. I’ve had corporate credit cards and I’ve had to deliver expense reports biweekly. For those that travel outside of the region you should expect flights, trains, rental cars, hotels, per diem as well. This would also be the case if you need to attend a conference out of the area.
I’ve found that most BD outsourcing firms cover their expenses in house with the exception of out of the area travel which is typically only if requested and approved by the client ahead of time. So typically if you use an outsourcing firm for business development its one flat rate monthly plus commissions. We have seen some outsourced firms bill for expenses so if you’re in conversations it’s important that you know what you will and will not be responsible for and for how long.
