Welcome to this issue of Ecom CFO Notebook – a weekly letter for 7–9 figure ecommerce founders and CFOs, sharing my perspective and stories for profitable growth.
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Sam here.
Less woo woo this week and back to keeping your ass solvent.
Two weeks ago we sent out our Q2 Benchmark report. Today, I want to walk through another one of the big patterns that stood out. If you missed the report, you can grab it here.
General and Administrative (G&A) or fixed costs.
When we’re budgeting at the beginning of the year, most of these costs just get estimated from the previous year and carried forward.
And then during the year, a bunch of stuff happens and whoops. Now we’re over budget.
The small stuff
We’re not systematically cutting expenses when circumstances change.
People leave, projects end, needs shift, but the recurring charges keep going. Software subscriptions are the obvious example: ChatGPT, Claude, and the three other AI tools at $200/month each.
When in reality we’re only using one consistently.
Then there’s the LinkedIn job postings from months ago still running and Google Workspace seats for people who left in spring. This stuff adds up.
The big stuff
The two biggest G&A items I see clients wrestling with right now are people and rent.
With people, more prospective clients I speak to are cutting their teams. Just in our little world, one client cutt their entire team (3 people) and 2 others have cut their full time CFOs.
Current clients are holding off on hiring FTEs – instead leveraging outsourced providers for longer.
On rent, I’m hearing more clients re-underwriting their decision to do fulfillment in house. Because volumes are generally flat to down, the inflection point between 3PL vs in-house is tipping towards the latter.
Given the choice between managing a larger team versus a smaller team, our clients are choosing a smaller team 9 out of 10 times.
Problem – soon enough and deep enough
Looking at our benchmark data for Q2, I fear that companies haven’t cut soon enough and deep enough to make up for lower margins and impending tariff impacts.
Check out the G&A increases across all company sizes:
- Under $10M companies: up 14.5%
- $10-50M companies: up 10.7%
- Over $50M companies: up 39.5%
Inflation was ~3% year-over-year. So where’s the other 8-36% going?
What it means at scale
What also caught my attention was the spread between G&A as a percentage of revenue across companies.
Look at the G&A spending as a percentage of revenue:
- Under $10M companies: Best performers at 16%, worst at 40%
- $10-50M companies: Best at 9%, worst at 33%
- Over $50M companies: Best at 3%, worst at 14%
Some companies are spending 3x more on G&A as a percentage of revenue than their peers in the same revenue range.
This comes down to systems, discipline, and hard decisions.
Why is this happening?
Why are companies spending more in G&A when revenue is meh and margins are worse?
I think it’s part delusion, part creep.
The delusional part is the bad side of what makes entrepreneurs successful. We entrepreneurs are (by definition) eternal optimists. But sometimes the cost of eternal optimism is a lack of discipline – looking at a situation with brutal honesty and making a hard decision.
To a lesser extent, the increase in G&A is due to creep. This is where the profit-first advocates begin their war chant. Because, to their point, when we’re sitting down with clients to budget, the focus is always contribution margin.
G&A often becomes a “what did we spend last year” and a small increase. And worse, founders and management aren’t managing fixed costs as closely as they should.
The profit-first hardliners are having their day in the sun with today’s environment (if you have no clue what I’m talking about – here)
What I would do
It’s easy for me to recommend blocking a few hours to review G&A line-by-line, but most of our clients are too busy gearing up for Q4. If you have the time, it’s worth it.
If you don’t have the time, a smaller ask is mentally preparing yourself for hard conversations and hard decisions in 2026 – as in January, not July.
What does that look like? First, talking to a coach, a mentor, an advisor. Blocking off a future ½ day on your calendar. Spending time in forums like ECF and MDS.
And if you need help, shoot me a note and I’ll point you in the right direction.
— Sam
🧭 Footnotes
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