Companeo guide sets out ways to cut business overhead costs

Small businesses in the UK are being urged to examine supplier contracts and the full cost of delivering their products and services in Companeo-backed guidance on reducing overheads, published on 12 October 2026.

The guide, published by SmallBusiness.co.uk with purchasing service Companeo, sets out checks covering energy, telecommunications, postage and administration. It does not put a figure on potential savings across a whole business: the starting point is each firm’s own income and expenditure.

What happened

The guidance recommends beginning with the previous year’s profit and loss account. That gives owners a record of income and spending from which to distinguish costs they would like to reduce from those requiring more urgent action.

An overhead review extends beyond the price of materials or the direct cost of providing a service. Rent, property expenses, electricity, gas, water and insurance all need to be included when assessing how much a business costs to run.

Staff-related expenditure also needs a wider calculation than basic wages. The guide includes management, administrative and maintenance salaries, alongside associated costs such as National Insurance contributions, in the assessment of indirect expenditure.

For individual products and services, it recommends examining production, distribution and storage costs as well as employee costs. The purpose is to establish whether the selling price covers the expenditure needed to deliver the work, rather than judging profitability from revenue alone.

Subtracting total costs from turnover shows the amount left after those expenses. The guide also suggests applying that exercise to particular products or services, taking account of the costs attributable to each one.

Telephone charges, postage and supplier payments complete the proposed administrative review. Reliable records underpin that exercise, alongside the bookkeeping demands covered in reporting on digital tax rules for small businesses.

The background

Energy receives particular attention because business contracts can differ substantially from household arrangements. The guide describes commercial packages as individually priced and generally longer-term, using five years for business contracts and 12 months for domestic contracts as its comparison.

It also distinguishes between business energy purchasing and household dual-fuel deals. Home-based firms are described as using domestic contracts, while commercial customers need to assess the separate terms of their business supplies.

The guidance contrasts a standard commercial VAT rate of 20% with 5% for domestic energy. Its comparison makes the overall bill, rather than the advertised unit rate alone, an important part of the cost review.

Standing charges are another part of that calculation. The guide says business size affects commercial standing charges and recommends checking that smaller firms’ charges and unit prices accurately reflect their circumstances.

For businesses in England, it sets out a microbusiness classification involving fewer than 10 full-time equivalent employees and turnover or a balance sheet total of up to £2m. It separately identifies annual consumption thresholds of 100,000 kWh of electricity and 293,000 kWh of gas as routes to microbusiness treatment regardless of size.

The small-business criteria it lists are fewer than 50 full-time equivalent employees, with turnover of up to £6.5m or a balance sheet total of up to £5m. The corresponding consumption thresholds are 200,000 kWh of electricity and 500,000 kWh of gas a year.

Those distinctions matter to the guide’s recommendation that customers check how their supplier has classified them. The focus on maintaining margins also sits alongside reporting on European retail financial distress, although this guidance offers no sector-by-sector savings estimates.

What people are saying

The guide’s central recommendation is to scrutinise unusually high expenses rather than treating recurring payments as fixed. It identifies electricity, gas and telephone contracts as areas where obtaining alternative quotes may reveal lower-cost arrangements.

On postage, it suggests a franking machine with an electronic scale could cut costs by up to 30%. That is a claim about one spending category, not a forecast reduction in total overheads, and the guide gives no worked example for an individual firm.

It also proposes outsourcing mailshots to reduce the labour involved in printing, filling envelopes and franking. The relevant comparison is therefore broader than the postage charge: staff time forms part of the existing cost.

For telecommunications, the guidance recommends checking whether a mobile contract makes calls to other mobiles cheaper. It also asks businesses to consider email or messaging for routine communication where these can replace calls.

Companeo describes its supplier-finding service as free to SMEs, with support available online and by telephone. It also provides suppliers with targeted SME leads, giving the guidance a commercial supplier-matching context.

Its recommendations focus on purchasing decisions and working practices rather than tax reform. That separates the proposed actions from the wider pressures examined in reporting on the hospitality sector’s tax burden.

What happens next

For firms considering an energy switch, the first check is whether the existing contract permits it. The guide identifies the end of a fixed term, an unchosen or “deemed” tariff, and arrangements without a contractual tie-in as circumstances in which switching may be possible.

An early move requires closer examination of the terms. The guidance discusses both contracts that keep customers committed until expiry and arrangements that may allow departure for a fee; businesses therefore need to establish which provisions apply before comparing the cost of leaving with a cheaper offer.

Notice requirements need checking separately. The guide gives 30 days as an example and flags possible rollover arrangements lasting up to 12 months, making the renewal terms another part of the contract review.

Where a broker is involved, owners are advised to establish what the broker charges, where that fee appears and which services it covers. That allows the cost of the intermediary to be considered alongside the supplier’s quoted price.

Before accepting a replacement contract, the guidance recommends checking every detail. It warns that agreement by telephone can be legally binding even without a signed document, making the verbal acceptance stage a commitment rather than simply another quotation request.

Operational changes can be considered alongside contract negotiations. The guide recommends monitoring consumption, checking appliance energy ratings before purchases, fitting energy-saving bulbs and asking staff to switch off lights and equipment overnight rather than leave appliances on standby.

There is no common implementation deadline in the guidance. The timing of a supplier change depends on the business’s existing contract, notice requirements and renewal arrangements, while the spending review begins with the financial records already available.