Why non-financial managers struggle with budget setting

How you handle the budget for your department can make a huge impact on the fortunes of the entire business. So why do so many companies fail to properly equip department managers? It’s a problem that stretching from Dubai to Rio de Janeiro, and here’s the main culprits.

Fear

Without proper training managers often fall into the trap of being too scared to make the decisions necessary to keep their departments on track. The fear takes over.

The best way to overcome the fear is through training. While someone may have the best skills to do their job in their sector, without the financial know-how they could turn into a massive drain on company finances.

Lack of an overall plan

Putting your everyday decisions into the context of the company finances can seem like wading through wet sand. How do the actions of one department impact another? Are there points where departments overlap?

To get around this issue requires the financial director meeting up with each department manager at least twice a year. By working with the financial director, each non-financial manager can see how their departments should be working in harmony with the whole company.

Inability to understand financial jargon

Trying to interpret a whole new set of terms can be daunting. For many the jargon itself is off-putting. Imagine you’d never heard of financial statements, overheads, working capital, profit margin, ROCE, ROI, COGS, balance sheet, cashflow, gross profits, to name just a few. Faced with a wall of unfamiliar terms can make people feel insecure and is a massive stumbling block to keeping their department’s finances in check.

It may appear cheaper to tell those fumbling around with the new terms to read a book. However, the most efficient way to help managers is to put them on a course. They can work alongside someone knowledgeable, whose job is purely to train them and their progress can be monitored.

Poor budgeting skills

Some people just don’t get a budget. They unconsciously believe that whatever they need will magically appear from the bottomless pit of company cash reserves. This attitude can come from a lack of knowledge of the business, which can be addressed by involving managers in high level discussion about where the company is heading and how much money is available to achieve the goals. More seriously is the manager who simply doesn’t understand budgets on a more basic level. Training is the key to addressing this fundamental lack in business skills.

Defending your corner

boxing

It doesn't need to come to blows if every understands financial jargon and can speak the same language !

Sometimes departments can go to war over the way the budget is portioned out. The result can be a very defensive mentality that can damage the company’s financial health.

This can be a deep-rooted, long lived battle that requires careful intervention by directors. Getting everyone around the table to discuss the causes of the conflict may be difficult and emotions can run high. However, to keep the business on track, it’s necessary. In some instances bringing in a business coach can be highly effective. By having a third party, with no affiliations to the company, brings a fresh perspective and can have a profound impact on the negative dynamics that have built up within the company.

For more information on training your non-financial managers in Dubai, please visit the ISM website: http://18.130.2.180. We run finance courses regularly and can tailor in-house training sessions to your company’s particular needs.

 

 

Dubai Frame

Is your tender in the 'frame'?

Whether you run a construction company wanting to get into the next Dubai Frame, or hope to become a preferred supplier to Al Tawam Hospital, you’ll have to create a tender with the clout to beat your competitors.

But before you begin what is a lengthy and costly exercise, the very first thing you should be asking yourself and your bid team is:

Is it worth it?

Going through a bid process can be expensive. Depending on how big the project, you have to budget for the actual creation on your tender. You may have to divert talented individuals from their day-to-day tasks to work on it. Experts may be brought in to help write, create graphics or make a video for the bid. Prototypes could be needed.

At every single stage in the process you and your team have to ask yourself if the bid is still valid. A brilliantly written bid or tender is one part of the equation here. You may discover through researching the tender that your company can’t completely fulfil the criteria: there are certain legal constraints that will cripple you how effective you can be, or you may come to the conclusion you simply don’t have the manpower needed to provide the service or products.

Far better to pull out when you see a major hurdle that can’t be overcome, than to blindly continue, swallowing your entire marketing and sale budget as you go.

Once you’ve decided that you are ready to push on with creating a tender, here’s some simple tips to help you on your way to successfully winning the contract.

It’s not about you

A big mistake made by many companies is to spend too much time in the document talking about themselves. But just like a salesman who doesn’t let the customer get a word in, a tender that doesn’t talk about how your company is going to help solve the customer’s problem, is a huge waste of everyone’s time.

How, why, what, where, when, who

Every writer follows these simple words to create a more compelling story. And a tender is exactly that: a story. You are telling the customer a tale about how your business is going to help their business be more successful in their enterprise. Tell them how you’ll do it, why your company is better, what you will do, where you’ll do it, when (timescales are very important as they show you have considered how their project will fit into your business), and who (are you going to build a new engine with the world’s top engineer? Then shout about it).

Be honest

If you are a small company bidding for a big contract, you can’t fudge the figures to look bigger. Not only will the government, big corporation, or institution find out, they’ll never accept a tender from you in the future. Better to be honest and highlight the benefits you bring as a smaller company.

Know your competition

Whether you know exactly who else is bidding or not, you should be aware of the general competition in your industry. Consider their strengths and weaknesses. You don’t reference them directly in your document, but you can show how your abilities outstrip others in your field.

Cost it properly

Don’t be fooled into thinking that the cheapest bid will win the work. They’ll be suspicious and wonder how you are going to deliver on such low margins. If you do win, you may well find you put yourself out of business fulfilling a contract that brings you no profit at best, and consumes all your capital at worst.

By costing it properly you will be showing you know the worth of your business expertise.

Successful tender writing can be daunting for the first timer. Here at ISM Dubai our expert instructors can train your team in the art of writing tenders and business proposals. Click on this link to find out more: http://18.130.2.180/courses/writing-business-proposals/index.php