Find the Right Biz for You Series (Part 6) When determining the ideal small business for you, make sure you give consideration to potential pitfalls and address them before they become significant issues.
Caution #1 – Current Employer Considerations
Many people start their businesses as a side business, building up their new venture during off hours, after work and weekends, while continuing to work a full time job.
A side business is a great way to test the waters of your business idea; however, there are some preliminary cautions to consider.
If your idea for a business involves providing a similar service or product to what your employer currently provides, consider whether you have an employment agreement with your employer. If so, check to see if it contains a non-compete clause. If it does, read it carefully to see: what the clause prohibits you from doing; for what period of time; and within what geographic range. Then check with an attorney who works in the employment law field in your state. Even if the clause appears to not apply to your circumstances, it is important to obtain a legal opinion. Your employer might see another perspective. Additionally, each US state has its own regulations and court opinions pertaining to non-competes. In some states, these agreements are close to unenforceable with the requirements for these clauses being quite stringent. In others, a broader interpretation may be permitted.
Alternatively, it may appear that the non-compete clause does directly apply to your new business idea. Don’t be discouraged. Again, check with an attorney in your state. Sometimes employers create these clauses without even knowing (or caring) whether they are enforceable because just having the language tends to have a chilling effect and may deter someone from working for a competitor or becoming a competitor just for the clause’s existence.
A reminder, I am not an attorney and am not providing legal advice. I’ve just worked in the employment law compliance field long enough to know that if such a clause exists, an attorney’s opinion is critical before moving forward with your business.
Even if you do not have an employment agreement between you and your employer, that does not mean you are in the clear. There may be a non-compete clause in your employment manual. If so, seek that legal opinion!
Other company policies may also require consideration, whether or not your proposed business is related in any way to that of your employer’s.
One policy to look out for is usually called something like Outside or Secondary Employment. What these policies typically state is that your job with your current employer is your primary responsibility and no other job or venture may take priority. Any time your employer requires you to work, including overtime or any time not on your regular schedule, you may not be permitted to allow another job or business to interfere.
This policy may also state that you are required to tell your employer if you intend on working for a second employer, including yourself. Prior approval of your employer may be required.
Your Time, Your Equipment, Your Supplies
Often it is tempting to work on researching your new business ideas or working on establishing your new venture while work is slow at your employment location. Fight the temptation! Never put your current source of financial income in jeopardy by crossing this line.
Additionally, never use company equipment (e.g. computers, phones, software) for work on your business. This includes company-owned laptops or phones you are permitted to take home. Usually companies limit use of their equipment to their business purposes only. Same goes for office or work supplies, no matter how seemingly small or insignificant.
Tell Your Employer
If you feel your employer will