November 2010 - Are things looking up for SMEs?


Business Law Update
November 2010

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Gary CousinsWelcome to the November Cousins Business Law ezine. This month we take a look at the prospects for small and mediums sized businesses as we spot some signs of improvement. There’s the next instalment of our guide to leasing business premises and a number of useful links to blogs and other business resources.

We hope you will find information relevant to your business in this month’s issue. Email your article suggestions or legal questions to   

Gary Cousins
0121 778 3212

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Are things looking up for SMEs? 

As we approach the end of 2010, the economy is still very fragile. However, most of the small and medium businesses we have been talking to are showing some improvement compared to this time last year. Our clients are saying they are busier now than they have been for a couple of years, although it is fair to say that a lot of this is due to them having cut back on costs and staffing levels to such an extent that they don’t have much spare capacity.

Some of the recent official statistics and research supports the view that things have improved slightly for SMEs. The latest insolvency statistics, published this month, show that there were 3,974 liquidations in the third quarter of this year, which is 13.9% down over the same quarter last year (4,615). Bankruptcies were also down over the year, from 18,347 to 13,907, a drop of 24.2%, although IVAs and debt relief orders have increased.

But, although more firms are surviving, there is little optimism that there will be any strong growth soon. According to research by the Confederation of British Industry and the Association of Chartered Certified Accountants, most small companies are not looking for outside investment to finance growth at the moment. The main source of outside finance is bank overdrafts, which is consistent with the view that growth is expected to be slow.

2011 looks like it will be a mixed year for SMEs. Many public-facing firms are planning to absorb the VAT rise themselves rather than pass this on to customers, which will hit profits at the beginning of the year. This will also be the year that public sector spending cuts will begin to have an effect. This will not only hit firms dealing directly with the public sector but also all firms as their depressive effect on the economy begins to take hold. The real question is how well the economy as a whole is placed and whether the growth expected from the economic recovery will offset the depressive effect of the cuts. Only time will tell.

One positive sign is that, if the slight growth in demand continues, SMEs will be looking to hire staff once again. Indeed recent research by Sage reveals that a quarter of SMEs are planning to increase their workforce in the next three months.

There appears to be slightly more optimism in the SME sector than was the case during most of 2010 although how well placed this optimism is still remains to be seen. The most likely outlook for 2010 is one of slow but steady growth and, if this turns out to be the case, this will certainly be welcome news for many companies. However, substantial growth in the SME sector as a whole still looks like it could be a long time coming.  

Legal Advice

Leasing business premises A – Z: D is for Dilapidations

Leasing business premises can be a real minefield for the unwary business owner. In a series of blog posts our commercial property team is taking readers through the various aspects of a commercial lease to explain some of the legal jargon and also provide some lease negotiation tips along the way.

D is for Dilapidations

‘Dilapidations’ is yet another legal piece of jargon commonly used in relation to business premises.

The first time a tenant sees the word 'dilapidations' is usually when an intimidating looking document called a Schedule of Dilapidations is delivered to them. This document is a formal schedule of all of the tenant's failures to comply with the terms of the lease insofar as they relate to the state and condition of the premises, and comes with an alarming schedule of costs for putting everything right. A schedule of dilapidations will deal with:

  • failure to keep the property up to the standard of repair required by the lease;
  • failure to keep the property in the state of decorative order required by the lease;
  • reinstatement of alterations carried out by the tenant during the term of the lease.

The schedule will normally be prepared by a building surveyor who will have inspected the premises prior to preparing the report.

The most common time for a schedule of dilapidations to be produced is either near to the end of the term of the lease or immediately after the lease has ended.

If you receive a schedule of dilapidations from your landlord it is essential you immediately consult a good building surveyor of your own and also a solicitor. These professionals will work together to challenge the schedule and should be able to negotiate down your liability.

Look out for the next installment - E is for Entry, rights of. 

Free lease renewal pack for commercial tenants

Renewing your lease? There’s a great opportunity to renegotiate and save money, but only if you start the process at the right time and fully understand your duties and responsibilities and those of your landlord. The Commercial Property team at CBL has put together an invaluable information pack for all commercial tenants.

The pack includes:

» 12 tips for negotiating your lease;

» an explanation of your responsibilities regarding dilapidations and repairing responsibilities;

» a discount voucher for £50 off a full lease review or advice for renegotiating the terms of your lease.

Register on the Cousins Business Law website to receive a free copy of the lease renewal pack or email

For immediate advice on renewing your business lease call
Steve Petty on 01926 629005.

Useful Links

Advice on copyright – getting it and infringement
Content on the UK copyright service website claims to dispel the 10 most common copyright myths. Amongst the myths explored is the common one about posting a copy of the work to yourself to secure copyright. It points out the dangers of relying on this method.
Blogs in brief

Members’ clubs and police powers – exploring a recent client case, this blog looks at police powers to close down licenced premises.

C is for Conflicts of Interest – it’s easy for a director to get caught out by not understanding their duties and responsibilities as a director. This blog explains how conflicts of interest need to be addressed.

Blog Watch: 10 ways to grow your business - simple advice from ‘the entrepreneurship guru’ Robert Craven. 

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Cousins Business Law is a member of the Law Society & regulated by the Solicitors Regulation Authority under number 485128. Head Office: Swan House PO Box 11543, Birmingham, B13 0ZL. Tel +44 (0)121 778 3212. Fax: +44(0)121 275 6155