Expense Reduction Analysts Romania: To be competitive in 2024, companies must reduce expenses by at least 15%

The year 2024 comes with new taxes, the increase of some taxes, inflationary pressures, the decline of the euro zone, plus a tense geopolitical context. To face the difficulties, the first step a company should take to remain profitable is to optimize costs by at least 15%. The main costs that companies will need to optimize this year are utilities, fuel, logistics, insurance, fleet management and working capital.

“In any field of activity, a difficult year and a volatile context are ahead. As a result, spending cuts of at least 15% could be required, but much depends on each company’s business sector and the customer segment that each business is targeting. For example, in order not to transfer the increased costs to the final individual consumer and thus maintain increasing sales volumes, for companies in the FMCG sector, a reduction in expenses of around 20-25% would be necessary. What is certain is that 2024 will be the year of the intelligent optimization of resources”, says Remus Hîrceagă, Country Manager of Expense Reduction Analysts (ERA) Romania.

Eurozone factories cut output significantly in December, with economic activity contracting for an 18th consecutive month, according to a recently released S&P report that indicates the economy is almost certainly in recession.

The year 2024 will undoubtedly be a year of great gains, but also of volatility and uncertainty. In the winning camp will be only those entrepreneurs who will understand how to adapt to the rules of the game.

Remus Hîrceagă adds that intelligence will be the word of the year in business, both in terms of the implementation of technologies based on artificial intelligence, and in relation to the establishment of ambitious but achievable objectives by companies. In addition, the ability of company leaders to make quick decisions in favor of cost optimization will make the difference in terms of success in an unprecedented competitive environment.

To be effective, cost optimization – a multi-stage operation whose ultimate goal is to minimize costs and maximize profit – must be performed by specialists to bring measurable value to a business. With the identification and elimination of sources of waste, various changes occur at the level of business processes already underway, which take time. Thus, a cost optimization process in a company can last from a few weeks to a few months or even years, depending on the economic contexts, the circumstances in which the respective business is carried out and the specific objectives of the organization.

“During each stage, all sources of low profitability are identified and eliminated. Infrastructure and maintenance costs are also reduced, so the company saves multiple resources in several segments (energy, logistics, packaging, waste management, insurance, working capital, etc.), the effect being growth”, added Remus Hîrceagă .

Expense Reduction Analysts (ERA) is a global consulting and management company specializing in cost management and optimization. The company, also present in Romania since 2011, has developed a business model that has been implemented in over 60 countries and, since 1992, has been offering its expertise to companies, covering a wide range of industrial sectors from food production, restaurants, hotels , hospitals, non-governmental organizations, manufacturing plants and other businesses covering more than 40 industries.