Most agency owners think of risk as something dramatic. A lawsuit. A huge client churning. A PR nightmare. But the real risks are usually quieter. They build up slowly:

• One person with too much power or too much knowledge

• A founder who hasn’t taken a real break in 18 months

• A client that becomes 60% of revenue

• A vague contract that works until it really doesn’t
  
  

At Barrel, we’ve lived through versions of all of these. And now, working with multiple agencies through Barrel Holdings, we see the same patterns repeat.

Here are 9 risks that show up across every agency, and how to get ahead of them before they become problems you can’t solve.

1. Founder Burnout

In small and mid-sized agencies, the founder is still a critical system.
When that system breaks - emotionally, mentally, or physically - the business doesn’t run the same.

We’ve seen the signs before: long hours, underpaying yourself, saying yes to everything, and carrying the stress in silence. Eventually, it shows up as delayed decisions, skipped reviews, and a slow erosion of momentum.

And that affects everything: revenue, morale, margins.

Preparation: Pay yourself properly. Build rest into your system. Stay connected to people who understand what you’re carrying. And most importantly, build a team and structure that can operate even when you step away.

2. Partner Conflict

Unresolved founder or partner tension is one of the fastest ways to destroy a healthy agency.

We’ve seen agencies shut down not because revenue disappeared, but because partners couldn’t align, communicate, or resolve conflict. Over time, resentment builds, and suddenly, the business is harder than it should be.

Preparation: Set clear roles. Schedule real check-ins with your co-founder, not just project updates. Put operating agreements in place while the relationship is still strong.

3. Key Person Dependency

When too much knowledge, trust, or responsibility sits with one person, the agency becomes fragile.

This shows up when a senior leader leaves, a project team quits mid‑engagement, or a founder is suddenly unavailable. We’ve seen this up close: a full project team walked out mid-build. It happened, and it left the agency scrambling to rebuild trust, reassign work, and keep the client from walking too.

Preparation: Cross‑training, documented processes, shared client relationships, and leadership succession planning. In some cases, key‑person insurance can provide financial breathing room, but systems matter more than policies.

4. Client Legal & Delivery Exposure

Client disputes are high‑impact, even when they’re rare.

Vague scopes, missed expectations, IP issues, or accessibility compliance can all escalate into legal claims that far exceed what the agency was paid. Uncapped liability clauses can quietly expose agencies to catastrophic downside.

Preparation: Clear MSAs with liability caps, well‑defined SOWs, change orders, approval logs, and E&O insurance. And one simple rule: deliver bad news early. Most disputes start when problems are hidden too long.

5. Employee Legal & Compliance Risk

Employment disputes can be just as damaging as client disputes - financially and emotionally.

Wrongful termination claims, misclassification issues, harassment complaints, or wage disputes often stem from poor documentation and surprise decisions.

Preparation: Solid handbooks, consistent performance feedback, documented expectations, and employment practices liability insurance (EPLI). Nothing should ever come as a shock to an employee, especially termination.

6. Business Continuity & Infrastructure Risk

Cyberattacks, data breaches, or physical disruptions don’t feel urgent…until they happen.

We’ve seen a breach freeze company bank accounts, halt payroll, and delay vendor payments. The cost wasn’t just financial. It broke trust with the team and clients overnight.

Preparation: Cloud backups, password managers, two‑factor authentication, cyber insurance, and basic continuity planning. You don’t need a whole corporate playbook, just a few “what if” scenarios thought through in advance.

7. Insolvency (Even When You’re Profitable)

Agencies don’t go under because they’re unprofitable on paper. They fail because they run out of cash. Delayed payments, poor billing discipline, or mismatched cash inflows and outflows can spiral quickly, especially if payroll is missed.

Preparation: Weekly cash‑flow visibility, conservative reserves, good payment terms, and a line of credit set up before you need it. Profit matters, but timing matters more.

8. Client Concentration

When one client represents 40%, 50%, or more of revenue, the agency is exposed, no matter how strong the relationship feels. Losing a single oversized client can trigger layoffs, debt, and forced downsizing overnight.

Preparation: Monitor concentration closely. Invest in business development before you need it. And stay proactive on satisfaction with your biggest accounts, surprises are what make this risk dangerous.

9. Strategic Misalignment

Not all risk is financial. Some of it is directional.

We’ve seen agencies build deep capability in markets that lose momentum: crypto, NFTs, even legacy government work. The execution was solid. But demand dried up.

The risk here is staying committed to something that no longer serves the business.

Preparation: Track profitability and retention by ICP. Watch industry tailwinds. Run small experiments before betting the company. Strategy isn’t about what you like doing, it’s about where durable demand exists.

The Takeaway

Running an agency will always involve risk.
But most risks don’t need to be surprises.

If you name them early, put systems in place, and stay just a few steps ahead, they become manageable. If you don’t, they build up quietly…until they take the business down with them.

🎧 We unpacked all of this - in more details and examples - in this podcast episode. [Listen to the full conversation here.]