Recalibrating Your Business Budget for 2021
Billing Category Considerations that Should Be On Your Radar
As we hit the ground running in 2021, business budgets are undergoing an additional layer of scrutiny to ensure that billing categories are aligned and forecasted spend is accurate. This careful review is largely in response to the fact that in 2020, budgets had to be drastically retooled thanks to COVID-19.
Have you taken time to take a closer look and calibrate your 2021 business budget to account for the ongoing pandemic, remote work landscape, and potential for in-person events and travel later in the year? If the answer is yes, kudos! If the answer is no, well, it’s not too late. Regardless of your answer, this post is for you as it sheds light on spending trends and billing category considerations.
Budget Category Considerations: Technology and Beyond
When the pandemic hit in early 2020, companies were left scrambling to enable their now remote workforce with the technology needed to get the job done efficiently and securely–often with both a staff and a budget far too small to support transition needs. CIOs scrambled to purchase mission-critical technology and services to maintain operations in unprecedented times. This impacted spend on priority IT projects which resulted in global tech investments dipping 3.2%, according to Gartner. Talk about a tumultuous year.
On the brightside, the analyst firm forecasts a 6.2% increase in 2021, highlighting, “Global spending on IT relating to remote work is forecast to hit $332.9 billion this year as businesses resume IT expansion plans delayed by the COVID-19 pandemic.”
Clearly, having budget categories for your remote workforce is an essential. However, have you thought about the staff (full time or contract) required to keep everyone logged in, Zoom troubleshooting and beyond? Tech support is one of the fastest growing job categories and business expenses out there. Be sure to plan accordingly if you haven’t done so already.
Continued Spend on Remote Work
While spend on work from home supplies hit a crescendo in mid-2020, this budget category is far from irrelevant and will likely be used frequently in 2021. In addition to regular expenses, employees in the field will need to purchase masks, hand sanitizer, and other forms of PPE. Employees at home will need office supplies and tools to ensure operations continue seamlessly.
Be sure to have categories for COVID-related expenses as well as remote work supplies so that each subset can be accurately tracked.
With the in-person events industry on hold, marketing departments are looking to spend their budgets on digital programs that will create human connection-driving virtual experiences. One of the ways this is being done is through social media advertising. eMarketer notes, “U.S. social network ad spending will rise by 11.4% to just over $40 billion this year. That’s an upgrade from our June forecast, in which we estimated just 4.8% growth in 2020.” The company anticipates 2021 spending in this category will increase to $49 billion, a projected 21.3% increase.
It’s essential to have budget sub-categories created to accurately track marketing spend. This will help your team to understand the impact and ROI of campaign and program investments.
The travel industry was one of the hardest hit in 2020. In fact, the U.S. Travel Association notes, “Since the beginning of March and through the end of 2020, the pandemic has resulted in $492 billion in cumulative losses for the U.S. travel economy, equating to a daily loss of approximately $1.6 billion for the past 10 months.”
The pandemic’s impact to travel continues to prevail and is one of the greatest budget-affecting unknowns for 2021. While it is safe to expect to get road warriors attending in-person meetings, it will be sometime before business travel reaches pre-pandemic levels.
Gary Kelly, Southwest Airlines Co. CEO agrees and noted at a recent industry conference, “Perhaps by the end of 2021, our assessment is that domestic business could be in the range of down 50% to 60% from the pre-pandemic level.
When it comes to your budget, we recommend taking into account that business travel will likely return later this year (in some capacity), and have minimum and maximum scenarios forecasted so as to accurately plan for spend in this category.
The Only Constant is Change: Planning for 2021
At TravelBank, 2020 taught us the importance of being nimble and responding to change as it knocked on our door. In 2021, we look forward to continuing to be a go-to resource for businesses looking to streamline expense management, corporate credit cards, and business travel through an all-in-one app that can be utilized cross-functionally.
Clearly, work from home is here to stay in a heightened capacity and with that, comes the need for different types of marketing, expenses, and technology. How have you adjusted your budget for 2021? We’d love to talk shop and compare spend trends. The TravelBank team can be reached here.