Cardaxia AI

Cardaxia Insights · SG&A Series: Part 1 of 6

Executives can quote their gross margin to two decimal places. Ask where their SG&A dollars go, and you get a pause. That pause is worth tens of millions.

Jon Dobell, Founder, Cardaxia · 6 minute read

If you are running a mid-market or high-growth business, here is a question for you: could you be sitting on $50 million or more in untapped enterprise value that is hiding in plain sight?

I have spent three decades working with start-up, mid-market and large businesses across the globe and across multiple functions, and I have noticed something. Executives who can tell you their gross margin to two decimal places often have only a directional idea of where their Selling, General & Administrative dollars actually go — whether they are getting value for that money, or how it compares to their sector and their peers.

Selling, General & Administrative (SG&A) expenses typically consume 20–30% or more of revenue in mid-market companies. That is materially higher than large enterprises. The Hackett Group’s 2026 SG&A Cost Study puts median SG&A at 16.2% of revenue across the 1,000 largest North American public companies, and 13.4% in Europe — the highest levels in five years in both regions. Analysis of US reported earnings by Calcbench shows that among smaller listed companies, 40% or more is not unheard of.

For a $500m business at the mid-market end of that range, SG&A is $100–150m every year.

Hackett also found that first-quartile performers run roughly six percentage points below the median. That gap is the prize — and unlike manufacturing cost or supply chain expense, SG&A rarely gets the holistic, strategic attention it deserves.

Why this matters now

Three converging forces are turning SG&A efficiency from a housekeeping exercise into a competitive imperative.

First, margin pressure is intensifying

The easy efficiency gains of the 2000s and 2010s — offshoring, shared services, cloud migration — have largely been captured. McKinsey’s October 2025 analysis of 882 S&P Global 1200 companies shows the median rate of SG&A improvement has slowed from 0.75% a year (2003–2013) to just 0.43% (2013–2024).

Hackett’s 2026 data goes further: SG&A costs have now outpaced revenue growth for five consecutive years, and much of the recent apparent improvement came from stronger revenue rather than genuine productivity gains. Standing still is no longer neutral. It is a decision to go backwards.

Second, AI is reshaping what is possible — but unevenly

Not the speculative, untested kind. The practical, deployable kind available today. McKinsey’s annual C-suite survey shows the share of organisations actively adopting generative AI rising from 2% in 2023 to 45% in 2025. But only 13% report having deployed agentic AI beyond pilots or research.

That gap is the story. Adoption is running well ahead of realised, verified value — and the space between the two is where most of the money is currently being lost. The organisations that close it will pull away from those that do not.

Third, mid-market businesses face a structural squeeze

They are too complex for small-business solutions, but often find enterprise transformation approaches expensive and slow to deliver value. Their scale means they may not have access to the same depth of specialist skills as a large listed peer. There is a real opportunity to rethink how SG&A transformation and operations get delivered for this segment — and that is what this series is about.

What this series covers

Across six insights I will share what I have learned about SG&A transformation and how it applies in mid-market businesses. The principles travel — they work just as well in larger organisations — but this series is focused on the mid-market, where the relative potential for uplift is much higher.

For this purpose I am treating mid-market as businesses with turnover between $100m and $1bn a year. What follows is not academic theory. It is practical insight drawn from work my colleagues and I have done with public companies and private businesses that needed to optimise without disrupting growth.

Here is what is coming:

The $50m Question — why SG&A optimisation matters more than you think — the competitive advantage hiding in your overhead, and why getting it right moves enterprise value more than most strategic initiatives. Read now →
The six domains of SG&A — where your money actually goes, and how AI is changing each area differently. (Coming soon)
Show me the money — where SG&A transformation has historically paid back, and how AI is shifting the opportunity map. (Coming soon)
Who can actually help — navigating the provider landscape, and what to look for in a transformation partner. (Coming soon)
Your next moves — a practical playbook for executives and owners to start unlocking SG&A value. (Coming soon)

A different conversation

This series challenges some conventional wisdom about how transformation should work.

The starting point: we need to move beyond advice-only, time-and-materials engagements toward models that genuinely align adviser and client success. The future belongs to output and outcome-based approaches that give better certainty of delivery and of value actually landing — not just value being forecast.

Who this is for

CEOs and owners running $100m–$1bn revenue businesses
CFOs trying to reduce cost across the SG&A spectrum
Private equity principals looking to drive value in portfolio companies
Board members overseeing optimisation programmes across SG&A domains

If you have ever thought “we should probably optimise our back office, but traditional approaches look expensive or slow”, this series is for you.

The promise

By the end of these six insights, you should have a clearer view on:

Where your SG&A dollars are actually going — and where they should go
Which domains offer the highest return for transformation effort in your business
How AI changes the economics of SG&A optimisation
What “good” looks like at different stages of company maturity
How to think about provider selection and engagement models
Concrete next steps you can take

Each insight is short, practical, and designed to help you make better decisions about SG&A — whether you do the work yourself or engage external help.

Our approach

At Cardaxia we believe mid-market and growth businesses deserve better options for SG&A outcomes. Large enterprises are well covered and typically have highly skilled internal functional leaders. In the mid-market that is often not the case, which makes it hard for an owner or CEO to know what to do, or who to turn to.

Most SG&A value is pursued through transformation programmes. Very little of it is ever independently verified. That is the gap we exist to close.

Our purpose is to ensure that every dollar of capital and every hour of organisational capacity committed to a transformation delivers explicitly quantified, board-aligned value — and that the evidence of that delivery is independent, auditable and complete.

Sources: The Hackett Group, 2026 North America and Europe SG&A Cost Study and Scorecard, July 2026. McKinsey & Company, “The SG&A challenge: Achieve excellence and outperform your peers”, Operations Practice, October 2025. Calcbench, analysis of US reported earnings.

Currency: all figures are Australian dollars unless otherwise noted. Third-party benchmark data is sourced from US and European listed-company populations and is indicative only; it is not a substitute for benchmarking against your own sector and business model.