Former employees competing against you...

[BeerThirty]

This question is primarily intended towards anyone who's owned a small business and employed other people.

What are your thoughts towards a trusted, former employee who leaves and goes on to create their own business that eventually competes directly with you?

I'd like to emphasize that I'm asking about "trusted" employees, not the dime-a-dozen ones who leave. Ones with years of experience that you've possibly invested a lot of time in, mentored and taught them trade secrets. The ones that probably know everything about your business inside and out and now they can use it against you.

Are you happy for them or do you have hostile thoughts?

 

[ilbcnu]

I taught them everything they know not everything I know. Nothing wrong with a man wanting to successful in his right and I have lost some good ones over the years and never tried to hold one back. Competition is good. Take pride in knowing you gave a man the skill set he needs to be successful.

 

[Deerhead]

Can have all current and future employees sign a non compete agreement. Good luck competing with the former employee

 

[1eyefishing]

Shoulda woulda coulda had a non-compete clause...

 

[buckpasser]

I think it’s critical to compensate an employee to a degree they wouldn’t want to leave if they are equipped with enough knowledge and ability to be real competition, and if they are valued by you. Otherwise I’d keep some things a secret from them. If you paid this person well and he has no valid grievance against you, I say shame on him. I think a classier guy would resist the temptation to take any customers from you. Good luck against him!

 

[Mexican Squealer]

I always expected it…never slowed me down a step though…another reason, as a business owner, to make sure you are engaged in the customer relationships..always try and be atleast “two or three deep” in the relationship.

 

[BeerThirty]

Shoulda woulda coulda had a non-compete clause...

My understanding is that those are fairly hard to enforce. They basically have to be settled in court and what kind of small business is going to fork up that kind of money? I've seen large corporations use them on higher-profile employees, but companies that size usually have in-house counsel and deeper pockets.

 

[earlthegoat2]

Anyone’s current job only serves to give them training and experience for their next job. It’s not all about good money or good working conditions even. (but if you provide those to your employees then that is great) Sometimes an employee wants to make their own way. They obviously think they have a better way.

The fact is, business owners make more money (usually, not always) than their employees do no matter how well compensated they may be. Would you begrudge anyone that opportunity?

I train all my employees to be BETTER than me if I can. Worrying about competition from anyone (including former employees) means you need to step up your own game.

When an employee of mine speaks about wanting to leave, I ask why. If it is a good reason and they give me adequate notice, I encourage them. If they want to compete with me…..well I guess that just doesn’t bother me. To my knowledge, none of them have stolen a customer from me.

Maybe it’s because I don’t have kids so there is no one I can pass anything on to besides employees or co workers.

 

[earlthegoat2]

Shoulda woulda coulda had a non-compete clause...

It varies state by state but for the most part, none of even your “good” employees are going to legally have a non-compete enforced against them. In many cases, the employee has to have certain management responsibilities and have the power to hire and fire other employees.

Just having that kind of hierarchy in place means you are either an incredibly large small business or you are no longer small.

Ive heard of, on several different occasions, usually when ownership of a company changes hands, managers presented with a non-compete contract and flat out refusing to sign it. Guess what? They are still working there in their full capacity.

 

[georgia_home]

Isnt there a non compete case on one of the higher courts recently?

 

[DAVE]

I have never considered an employee as my property, or that he owes me something other than a days work for a days pay. It would be a pretty small, petty man to begrudge an employee for wanting to seek a better opportunity for him self and family. My business and customers are my responsibility and if an ex employee can lure my customers away it is because I lost them not because he stole them. I always encourage an employee to step out and go for or try something different if that is in their heart. Do what is right, be generous and happy, you only get one shot at this life.

 

[LTZ25]

You can't expect them to stay in your emploee until you die , it's just the way business works . How did you get your start ?

 

[srb]

What I have found here lately is the customer is more loyal than the employee.

Employee A started to talk with some of my customers , My loyal customers called me immediately and wanted to know what Employee A was doing???
Trying to take our jobs..Here is another to this also, Employee a started recruiting my other Employees…
Now was getting ehee at that point….
Carma will come back.

 

[NE GA Pappy]

I have trained several people over the years that have left and started their own business. Some of them worked out, some didn't. But my attitude toward the employee has always been 'If you think you can better yourself and your family, go for it'

I have been doing this long enough to know a couple of things....

1. If you don't like how things are going now, just wait. Things will change.

2. If you do like how things are going now, just wait. Things will change.

 

[TJay]

He's a competitor now. He will be vulnerable on startup. Outprice him and outwork him. Show him how much fun it is to be the boss.

 

[menhadenman]

He's a competitor now. He will be vulnerable on startup. Outprice him and outwork him. Show him how much fun it is to be the boss.

Good advice here. Also don't know what you do but I'd go the extra mile to reach out to your customers/clients that he's surely checking in with (if it's that kind of business).

Maybe get a look at what he's up to in terms of website, advertisements, outreach since he'll be looking to get a leg up. Think of plugging those holes for your own business, if they exist.

I always try to understand the strengths and weaknesses of our competition and a "how do we lose this one" mentality. Getting a look in the mirror is also something that is hard for us to do.

Relationships and reputation are the two most important things in many businesses. Trust goes a long way.

Good luck - the hungry dog always runs faster.

 

[DannyW]

You can't expect them to stay in your emploee until you die , it's just the way business works . How did you get your start ?

This^^^

I have no evidence but off hand I would bet that somewhere around 50% of small businesses worked for someone in the same business first.

 

[mrs. hornet22]

Shoulda woulda coulda had a non-compete clause...

I had to sign one at the job I held for 20 years.

What I have found here lately is the customer is more loyal than the employee.

Employee A started to talk with some of my customers , My loyal customers called me immediately and wanted to know what Employee A was doing???
Trying to take our jobs..Here is another to this also, Employee a started recruiting my other Employees…
Now was getting ehee at that point….
Carma will come back.

My boss would get her loyal customers to try and get us workers to talk bad about her. They would then report report back to her. Thank goodness I was wise and didn't fall for it. Boss thanked me for my loyalty.

 

[Tight Lines]

This question is primarily intended towards anyone who's owned a small business and employed other people.

What are your thoughts towards a trusted, former employee who leaves and goes on to create their own business that eventually competes directly with you?

I'd like to emphasize that I'm asking about "trusted" employees, not the dime-a-dozen ones who leave. Ones with years of experience that you've possibly invested a lot of time in, mentored and taught them trade secrets. The ones that probably know everything about your business inside and out and now they can use it against you.

Are you happy for them or do you have hostile thoughts?

Completely happy for them.

When I was a CEO or COO in growth businesses, we had a lot of competitors by the very nature of the businesses...I viewed my role as (1) building a healthy, profitable business, (2) building a high performing team, and (3) mentoring the young people in the business to be better than they ever thought they could, even if that meant leaving and competing.

Most stayed, some left, and some became direct competitors.

My view is that if I am doing my job, they don't want to leave, and even if they do, if one person can bring down what I've built, then it wasn't that durable anyway...

Sure, maybe disappointing to see someone you mentored leave, but that's what you mentored them for in the first place...

IMHO...

 

[REDMOND1858]

Can have all current and future employees sign a non compete agreement. Good luck competing with the former employee

This has come up a lot in a line of work I used to be in. Nearly every similar company had a non compete agreement you had to sign upon hiring. A couple of the companies got tired of having employees jump ship for more pay. They tried to fight and lost the battle.

Basically the way I understood it as it was described to them, If you have an employee who is only an employee, they have the right to leave and do whatever they choose. The only time it would hold up is in the instance someone buys a company and the seller/buyer have a non compete agreement. The seller can’t turn around and open a similar company in the area described in the agreement.

Not sure this is always the case, but I’ve always been told a typical employee non-compete is a deterrent with no legal backing.