What Can Happen When You Compete With a Former Employer

We are all taught that is best to start a business is to acquire experience and knowledge first by working at a company in the field that you are planning to do business in. However, there could be problems with that. What are these problems and how can you, as an entrepreneur, avoid it?

Sometimes it is our goal simply to learn and acquire knowledge from our experience working for a boss.

Once we acquire that knowledge, we are then set to start our own business on a similar field. That’s because we already how things work in the business. All in all, starting your own business after working for someone in the same field is a process as easy as one, two and three. However, that’s not always the case.

You Could Be In For a World of Hurt

More often that not, new entrepreneurs that start up their business after leaving a company they worked for will find that they are in for a world of hurt. They could be facing legal action from their former employers.

You see, some companies have a clause in their employment that disallows employees from seeking employment within a competitor for a set period of time after resignation. Others simply forbid them their former employees to seek employment in a competitor company and, of course, competing directly with the former employer.

The reason for this is proprietary. Employees, especially the ones in the higher echelons of the company, could have acquired knowledge that could be used against the employer. These information could include client information, information on proprietary business technology and many others. It may seem unfair but you signed that contract, which is indicative of your consent and your knowledge of what right the company has over your employment after resignation.

However, It Can Be Avoided

Like mentioned above, more often that not, new entrepreneurs are prone to being subjected to legal action after resigning and starting their business. However, that’s not always the case. There are indeed some cases where employees who ultimately become competitors with their ex-employers even become partners with them.

One way to avoid competing directly and being sued by your ex-employer is to start a business that is related to your former company but is not directly competing with it. For example, if you formerly work at a commercial salon, you can choose to start a business dealing in beauty salon supplies.

However, if you’re really planning to go head-on, the real trick is not to burn any bridges. Some people may be tempted to just leave and not clear things up with the ex-employer, and turn up as a competitor after a while. The real secret to ex-employees becoming competitors cum partners with a former employer is that they were gracious enough to open up to their bosses about their plans after resignation. This act, even if it could still result to legal action between you and your former boss, shows your respect for the employer.


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