Bear in mind that there will be always some variance to explain versus your last forecast, it may sound absurd since you put all your efforts I providing your best predictions and now you need to justify what was wrong, why and in which measure. This is part of the game and you need to continue to play it through in order to refine your tactical tools and methodology.
The variance analyses serves essentially to track the nature and the volume of any impact in your P&L and Balance-sheet vs. your previous forecasted figures. The variance to forecast has raised some additional questions. Ok, let’s roll up your sleeves and do the hardest job: analyze the figures and then investigate, ask questions, raise issues, get CEO’s and manager’s attention and align the focuses between the functions involved! The nature of your work will therefore be split between operative and communicative performance.
Explaining the variances
Split the issues in 2 main areas: big variances, small variances.
Now be focused on the big variances. Split this cluster into 2 further areas: variances directly attributable to the sales, the variable costs and variances due to fixed costs.
All those variances coming from the variable costs will be soon addressed by the sales volume (e.g. incentive, bonus, freight, promotion, absolute value of margin, travel and expenses, COGS for sure, and many others). The variances on fixed costs can then easily be identified (new hiring, rent renewal, facilities, safety and so on).
You have composed the puzzle of the post forecast and the picture is now clearer so you are able to argue any detail with CEO and the interested managers.
But let’s stay for a while on CEO implications. Why, how and when report to the CEO the essence of your investigation.
The CEO must be the second person in the company who needs to care / understand and follow up the company results. The first is You.
Once the CEO has metabolized the results of your analyses and outcome he/she can support you with any further corrective actions and align the focus with the functions involved. Essential element to keep your next forecast effective.
The CEO may know of additional information to explain and support your assumptions, especially concerning sales, specific deals and projects, extraordinary items which make the difference.
Be effective and involving. Show figures with appeal providing meaningful graphs or infograph, correlate the arguments and provide for your input with confidence. You know your work, you know how to contribute to the company success and the CEO needs to listen to your powerful and holistic feedback.
It’s never a good time since the CEO is always very busy and so do it ‘As Soon As Possible’. Better should be scheduling a short meeting and talk directly with the support of your slides and the passion of your voice so she/he can treasure the logic of your driving guidelines! In alternative fix a “very short call” which can get longer only if CEO will be further available and will positively react to THE WAY you have proposed and exposed your arguments.