Cost Structure Analysis · Interview Question
A company's SGA has grown from 20% to 30% of revenue. How would you diagnose the problem?
How to answer
Decompose SGA into its components: (1) Sales costs — salesperson compensation, commissions, travel, CRM tools, (2) Marketing — advertising, events, digital spend, (3) General — corporate overhead, rent, utilities, legal, finance, HR, IT, (4) Administrative — executive compensation, board costs, insurance. For each: compare growth rate vs. revenue growth rate. Common culprits: hired aggressively in sales but revenue didn't follow (sales productivity decline), marketing spend increased without proportional revenue lift (declining ROMI), corporate overhead grew through office expansion or headcount bloat. Calculate cost per employee and revenue per employee trends. The 10pp increase on $500M revenue = $50M — finding that is the case priority.
Key idea: Break SGA into sales, marketing, general, and admin; find which grew fastest
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