Fast growing businesses move quickly. They hire new staff, win new sales, build new products, buy other businesses and grow into new markets, often faster than their legal and commercial systems can keep up.
The risks that build up during fast growth are rarely the dramatic ones like fraud or a big lawsuit. The real danger is quieter, because it builds slowly in the background and you often only notice it once something has already gone wrong.
Below are the twelve risks Tees sees most often and how you can better plan for the future.
A company structure that no longer reflects the business
Many businesses start out as simple limited companies, then outgrow that structure without anyone noticing. Trading assets end up sitting next to non trading assets in the same company, and there is no holding company above them to separate the two. If a group structure does exist, it was often built reactively rather than planned properly. This can raise your tax bill, weaken the protection you have from liability, and make it harder to sell the business cleanly in future. A structure review is often the first thing worth putting on the calendar.
A shareholders’ agreement that was never updated
An agreement written for three founders with £3m of revenue rarely still works once you have six shareholders, an outside investor and £100m of turnover. Rules about who makes decisions, rules about forcing a sale, and rules about how people leave the business can all quietly stop making sense as the business changes shape. It’s worth checking whether your agreement still matches the business it now governs.
Employment contracts that haven’t kept pace with the business
Contracts are usually written once, when someone is hired, then never looked at again. Someone who joined as a manager may now be a director but could still be working under their old contract, and a restriction that made sense for a junior role often gives you no real protection once that person has senior access and senior relationships. A contract review tends to turn up more of these gaps than people expect.
Unenforceable restrictive covenants
The covenants exist and sit in the contracts, but no one has ever checked whether they would actually hold up or updated them as roles changed. Then a key person leaves and takes three of your best clients with them, and that’s when you find out the covenants offered no real protection at all. Checking these before someone leaves is far more useful than checking them after.
Commercial contracts that don’t reflect the risk
Liability limits set too low, ownership of intellectual property left unclear, and clauses that let a client walk away if you sell the business are all common problems. Most of the contracts that run your day to day business were written back when the business was smaller and less was at stake, so they’ve simply never been revisited. A review of your main contract templates is usually overdue by the time anyone thinks to ask for one.
Intellectual property that isn’t owned or protected
Businesses create valuable intellectual property all the time, including software, brand names, content, processes and designs. But the steps needed to properly own and protect it are often skipped, so contractors who built key assets may never have signed over the rights, and trademarks may never have been registered. The record of what IP you actually hold is often out of date, if it exists at all. Getting ownership properly documented is a small job compared with the value it protects.
An unclear IR35 position
The off payroll working rules put the responsibility for deciding IR35 status on the business that hires the contractor. Many businesses at this stage use a lot of contractors but have never formally checked their IR35 position, and HMRC is checking this more closely than before. A formal review now is far cheaper than an HMRC investigation later.
Commercial leases with obligations that aren’t understood
Most businesses that rent their premises could not clearly explain their repair obligations, what they might owe at the end of the lease, or the conditions attached to breaking it early. These are not just legal details, because they turn directly into real costs when the lease ends. Understanding these terms early gives you far more room to plan around them.
No exit or succession plan
Most owners plan to exit the business at some point, but most are not actually ready for it when the time comes. Getting the structure, the tax position and the commercial position right for a sale or handover takes two to three years, so businesses that only start planning once they’re ready to sell usually end up with a lower price. The earlier this planning starts, the more value it tends to protect.
Key man risk that isn’t managed
Sometimes one or two people are essential to the business, whether that’s the founder, a key client contact or a technical expert, and relying on them this heavily is itself a risk. It affects how well the business copes if something happens to them, how easily it can attract investment, and what it’s worth if you sell it. Naming this risk is usually the hardest part, and managing it becomes much easier once it’s out in the open.
Disputes managed reactively rather than proactively
Most businesses at this stage have some unresolved tension with a supplier, a client or a former employee. Some of these will sort themselves out, while others will get worse, and the businesses that handle disputes best are the ones that understand their legal position early enough to make a considered choice about how to respond. Getting a clear read on your position early gives you far more options later.
Legal advice that comes too late
The same pattern shows up across every risk on this list: legal advice is usually sought once the problem has already happened, rather than before it started. A contract gets challenged when it should have been reviewed two years earlier, a shareholder dispute blows up because the agreement was never updated when ownership changed, and an employment claim arrives because a process wasn’t followed properly. A good commercial lawyer isn’t there to fix a crisis. Their real job is to help you avoid one.
Health check your business
The health check was built to help businesses turning over between £25m and £350m understand where they stand. It covers the five areas where Tees sees the biggest exposure: structure and governance, people and employment, commercial contracts, property and exit readiness.
It takes five minutes to complete, and the results are based on your own answers. For most business owners it becomes the start of a useful conversation, not because it tells them something new, but because it puts structure and priority around things they already suspected.
Complete the Risk Radar health check here.
