The Top 5 Traps That Turn Fast-Growing Businesses into Train Wrecks

How to Minimise Risk Now to Avoid a Downfall in the Future

Want to sit back and enjoy the ultimate lifestyle of luxury, freedom, and the spoils of your hard work… instead of letting costly legal issues destroy the empire you’ve built?

This article will show you how to maximize your business growth while minimizing risks that can lead to a downfall.

If you’re like most business owners, you have your sights set on that one BIG goal… the goal that will let you know you’ve finally “made it” and enable you to enjoy the finer things in life. So, you pour everything you have into achieving that goal and growing your business.

Here’s the problem: While you’re busy chasing excellence – a very noble goal – there are traps waiting to trip you up along the way that you can’t even see right now. And unless you get your “legal house” in order, these pitfalls can derail your dreams in an instant and stop your fast-growing business in its tracks.

Imagine years of planning, hard work, and sacrifice going up in smoke because of an unforeseen issue that ends up costing your business a fortune in disputes, claims, and most of all, your valuable time that can never be regained.

Unfortunately, as a practicing solicitor, I’ve seen countless businesses – fast-growing, successful businesses like yours – turn into train wrecks… all because of unexpected legal and structural issues that could have been avoided had they been aware of the risks and taken preventative action.

See, when a business goes through a period of explosive growth, its legal environment often can’t keep up the pace. This leaves your business exposed to risks that only get bigger as your organisation continues to grow.

That’s why I’ve put together a special series highlighting the major legal risks growing businesses face. It’s my hope that you’ll be able to protect yourself from the start and avoid the same mistakes others have made by understanding these risks and how to navigate them effectively.

Let’s get into it so you can protect your empire.

The top legal traps that can destroy even the most successful, fastest growing businesses can be lumped into 5 main categories, including:


  • Cashflow Issues: The biggest problem affecting small businesses in Australia is cashflow. Without proper cashflow, the lifeblood of any company, even a profitable organisation can put itself out of business. The worst part is, many of those organisations that failed due to insufficient cashflow could have succeeded simply by having rigorous debt collection systems in place, by making simple changes to the way they engage with their customers, and by understanding the warning signs of customers that might be about to face solvency issues (so that you can act quickly before you become stuck in a list of unpaid creditors). Setting up these systems before problems appear is key to ensuring the success of your business.
  • Employee Claims: It’s frustrating when employee relationships don’t work out the way you had planned, but sometimes trying to fix the problem (by terminating an employee) can lead to far more than frustration if you don’t understand the process. Employee claims often end up costing businesses tens (and sometimes hundreds) of thousands of dollars in legal fees, lost time and focus, and claim pay-outs. However, you can minimise this risk easily by simply having the right systems in place from the beginning, to allow you to deal with performance issues upfront, and if necessary, ensure that you are protected from disputes and unfair dismissal claims if you do decide to terminate. Once again, proactive action is the key.
  • Litigation and Disputes: Drawn-out litigation and disputes not only cost a fortune in legal fees, but they also take away valuable time and focus that could have been spent growing your business further. Instead, you’ll find yourself caught up in the courts. But with the right kind of quality contracts in place from the start, as well as proper management of disputes, you can avoid legal issues that harm your business.
  • Intellectual Property Loss: Intellectual property is usually one of the most valuable assets of a business, but the most misunderstood. It is only when a businesses’ intellectual property is under fire that the value of it becomes painfully apparent. Attacks on a businesses’ IP ownership, battling with competitors using branding that is too similar and dealing with the misuse of clients’ lists and confidential information are all issues that can be protected against by having the right approaches in place from the start.
  • Structure Issues: When you don’t have the right structure in place to protect your business and its directors, you’re asking for trouble. Without the proper structure around you, you are exposing your business to problems that could have been avoided by getting the right advice early on, and potentially exposing its directors to personal liability. Tackling issues with the structure of the business early on can literally save hundreds of thousands of dollars – we have even seen the wrong structure cost some of our clients millions of dollars.

If you want to avoid a painful downfall and watch your empire crumble, the best thing to do is avoid these 5 common traps in the first place. Be proactive instead of reactive and start minimizing your risks now before they get out of control. It’s easy to get excited about your growing business, but don’t let busyness blind you to the risks you face as you continue to grow.

In future articles, you’ll take a deep dive into each of these 5 categories specifically and discover some tools, tips, and tricks to help your organisation avoid becoming just another statistic in the graveyard of failed businesses.

But until then, here’s a few quick takeaway tips you can put into action right now to reduce your risk:


  • Assess your business now and at least once every year to ensure you understand what risks you are currently exposed to and at what level. Write it in your calendar now so you don’t forget!
  • Review your key business agreements (including client agreements, employment & contractor agreements, supplier agreements & business partner agreements) and ensure that they are using the right approaches to protect your business against litigation, and against loss – and to ensure they are staying current with the changing legislation and regulatory environment. As your business grows, the approaches in all of these key agreements will need to change to ensure they are adequately protecting your business and not leaving you exposed.
  • Measure key areas like your debtor levels (and whether the financial failure of any of your debtors would impact your business) and the value of (and protection of) your intellectual property in order to know where your business stands and how well protected you really are.

Not sure where to start with your assessment in these areas? No worries. I’ve created a free online assessment that you can use as a basis for undertaking your annual review. It only takes about 5 minutes to complete, and there’s absolutely no cost or obligation.

Simply click on the link below to get started now!

This FREE 5-Minute Assessment Just Might Be the Most Important Thing You Do for Your Business All Year!

Disclaimer: The material contained on this website is provided for general information purposes only and does not constitute legal advice. You should not depend upon any information appearing on this website without seeking legal advice. We do not guarantee that the contents of this website will be accurate, complete or up-to-date.

Liability limited by a scheme approved under Professional Standards Legislation

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