SG&A comparables as a percentage of net sales

If you look at public company filings Sales and Marketing will be combined but G&A is separated. Look at Yahoo Finance for comparable public companies and when you have one you can then look at who Yahoo compares them with and be able to drill down from there. The Hackett Group has a benchmarking practice focued on the G&A function and their components

http://www.thehackettgroup.com/solutions/business-benchmarking.jsp

I second Joseph's recommendation. ProfitCents is by Sageworks Inc and their data is updated in real time by the thousands of CPAs who use the service for their clients.

I train bankers in loan decision-making and know that Sageworks uses the same data to help lenders when utilizing your financial statements in a loan decision.

We used a service named OPEXEngine to benchmark ourselves. I don't know how it compares to the recommendations above or for your industry. But it worked for us and was useful--although we were a venture-backed, SaaS, healthcare IT company. We did a "right-size" exercise and it's not a fun thing to do. Good luck.

Anonymous, there are a lot of ways to look at this exercise in the context of what I understand that you are trying to accomplish. To some extent, different measurements yield much different results even across a broad vertical industry such as "US distribution company". My suggestion would to critically assess your company's situation and go with your gut as to what the problem might be and focus there.

For example, it could be sales and marketing effectiveness and that is what you would want to focus on in terms of productivity, cost of client acquisition, or co-op ad support spend. Perhaps rather than (or in addition to the S) G&A is the problem, in which case the Efficiency Ratio might be best to use. I wouldn't rule out problems above the G&A line in which case different metrics and analysis would be appropriate.

At the end of the day, there is no one size fits all approach that is really effective and truely the analysis needs to be occurring at a granular level. Good luck, I've done what you're doing and it is really, really, hard.

Anonymous,

One of the difficulties of the exercise are in making sure you have apples-to-apples comparisons with the benchmark, for items like some have mentioned here such as rolling in R&D, or combining S with the G&A.

A second difficulty is that the decision to spend on items reflects a mix of stakeholder concerns, which each company will treat differently, so that costs are not just about costs.

Finally, cost studies often reflect the underlying agenda's of those who initiate them, which may become problematic.

With respect to the measure you mentioned, a final caution is to make sure your revenue items are comparable. For example, the price of corn has approximately doubled since last year, so if you were a producer that used corn as a raw material and the cost was fully passed through in revenue, even if your firm did the exact same amount of volume as last year and everything else (headcount, etc.) was exactly the same as last year, your % spend vs. revenues will have halved, even though nothing changed!

I'm sure in distribution there are some types of distributors with high margin and some with low, some with high revenue volatility and some not, etc., so even within an industry the process of sorting apples and oranges is important if you are to have any faith in the benchmark.

All that being said, if you have to go through the exercise you have to go through the exercise. I agree with Jeffrey that the more granular you can do it the better, as some (though not all) of the things that make the exercise not so valuable are at least minimized to the extent possible.

Am I inferring correctly from the question that you are able to establish the metric (i.e. it was not supplied via the project team, sr. management, etc.)? One piece of advice I have heard about these exercises is that you should shoot for the 2nd quartile, good enough to avoid the magnifying glass, but not too good that folks think you got something wrong in the analysis or are hiding something!

Thanks.

Dave