Peer-to-Peer: How can business owners stop employees from stealing ideas and starting their own companies?

Written by ProfitGuide Staff


“I am a new entrepreneur running a small but growing business in custom window fashions and home furnishings. I spent thousands of hours and dollars acquiring market information and locating suppliers before plunging into this business. I hired one salesperson who had no prior experience in the industry, and I extensively trained him. But after learning everything there is to know about my business, the fellow stole data from me, poached one of my employees and started his own identical business, which directly competes with mine.

“Could I have avoided this situation? How do business owners stop employees from stealing their ideas and starting their own companies? And should I take this person to court?”

Submit a question.

Reader responses

Jim Kinnear:

My company has designed this aspect out of its business model. I want the people in my business to be as successful as I am. In fact, I want them to be more successful, and then leave to set up their own operations.

Our business model ensures that I will be compensated for their success as a reward for training them to achieve that success. This encourages the junior individual to be as energetic as possible as he/she strives toward the level that I have. The eventual income that I will derive from his independence is my incentive to train, mentor and coach him to achieve this success, resulting in a win-win.

Rob Carol, Action International Canada:

Getting an employee to sign a non-compete agreement is one solution. But if it’s fairly broad, it won’t be enforceable, so you need to be fairly specific. Usually employees leave and start a competing business because they are unhappy with the way they are managed or compensated. Share the wealth and everyone wins.

Darren Pereira, Indusblue Inc.:

If you’re a business owner, you should know that the first thing you’re in is sales. Without sales, there’s no growth! I don’t only mean company sales, I mean selling your company’s value system so your employees truly live it. The unfortunate truth is that you can’t stop an employee from stealing your ideas, stealing your staff or even stealing your staplers. However, if you treat them with the respect they deserve and have them truly believe in your vision, you won’t have to worry about a thing.

You first have to sell your employees on you, your business, your code of ethics, the nature of your business and company culture. These are some of the things I do in my digital marketing company, which I’ve been building for three years, to ensure that my guys are working towards the same goals that I am. Once you have that in place, it’s highly unlikely they will leave you for any reason.

  • Treat employees like team members where the only boss is the project or task at hand
  • Check egos at the door during meetings
  • Forgive human mishaps (lateness, calling in sick)
  • Reward hard work. Sometimes my guys go above and beyond because they are given creative freedom. When we deliver on time, we take the team out for dinner and drinks
  • Manage client expectations so employees feel their lives are respected. I protect my people by pushing back against ridiculous client expectations. I’d rather lose a pushy client than have employees be miserable at work
  • Play sports with your employees. I play volleyball and basketball in a league, and some of the guys at my company play on my team. Some of them are better than me, and I encourage their spirit
  • Lead with confidence and clear goals, not tyranny
  • Share your company’s goals with your employees. Last year I told my company of three that we had to make half a million in revenue, and we fell short by only a few thousand dollars. This year, my company of eight knows we have a goal of $1.5 million. I strongly feel that we will surpass that because every one of my people is working towards that goal.

Good luck with your business. It’s 6.30 p.m. on a Friday and I’m off to play ball with the guys. Cheers!

For his answer, Darren Pereira will receive a copy of The New Conceptual Selling, by Robert B. Miller and Stephen E. Heiman.

Have a question for your fellow entrepreneurs? Send it to Peer-to-Peer.

Originally appeared on PROFITguide.com