CHAPTER 10

Loyal Until the End

Figure 10 Noncompete

Photo: William_Potter/iStock by Getty Images

A noncompete document is an agreement in which one party agrees not to start or enter another business which is in competition with a specific business or industry. Specific parameters are listed. They do have to be within a reasonable distance and time frame of leaving your previous job in order for it to hold up. It is both business savvy and street smart.

The document title is self-explanatory. An employee will not compete with the employer who is providing her with a specific job opportunity. This type of agreement is smart to put into place in industries involving sales and services.

In most service and sales-based businesses, individuals are given insight and tools. They are educated and mentored and eventually given the opportunity to grow a client base, and that’s what we want. So, as the owner of the company, we make sure employees have all the resources that are needed in order to do just that. From marketing, to education to supplies, these business building tools come out of the, otherwise known as the business owner’s pocket. The owner of the company is basically making an investment in the employees and hoping to get a return on that investment. A non-compete agreement is generally set up to protect the legitimate interests of a business. Some examples of such businesses are medical providers, salespeople, service providers, accountants, and lawyers. Virtually every type of business can be protected through a noncompete.

The noncompete document has become a necessary part of protecting business structures. If your business does not have a noncompete in place with your employees, you really should consider getting one.

You do not want to invest tons of time, money, and energy into an employee who is going to take, take, take … and then roll out and open up their own shop down the block essentially becoming direct competition. How can you avoid this from happening? Well for starters, you can present each new hire with a noncompete agreement, specifying a distance from the original business, in which they cannot operate and a reasonable amount of time in which they cannot compete in this area. This type of agreement is standard throughout many industries.

Luke’s Gym

Let’s take Luke for example. Luke just opened a brand new, state-of-theart gym. Luke saved up all the money he could. He took out a small business loan and he got things rolling. Exciting, right! Yes, it is, because it takes a lot of nerve to take this kind of risk!

Luke recruited some of his good friends to come in as personal trainers. He helped them get their certifications and cultivated them. While he encouraged them to have a personal style, he personally coached them to enhance the overall client experience. This provided a universal style of training for his company’s brand. He watched his business grow. One of his buddies in particular was very motivated and successful.

Tony built an incredible client base. His social media presence stood out and he quickly gained many followers. He even started a side gig running senior citizen workout camps outside of the gym. Tony had Luke and some of the other trainers help him with the senior camps. Luke was happy to support his friend. The senior camps which Tony started were not in competition with his gym and it was a great way to support the community. Seeing how serious Tony was about his profession, Luke really helped promote Tony both in the gym and for his outside camps. They worked so well together and really lifted each other up. They had a very unique and inspiring professional relationship and friendship.

What Luke didn’t do was have Tony or any of the other staff members sign a noncompete. Luke was friends with all of these guys and especially Tony. They were best friends. Luke had nothing to worry about with any of them. They would never betray him and leave the business that built them. Luke felt strongly about how loyal they were and he was just as loyal to them. He would do anything for these guys and vice versa … so he thought.

Then one day Luke started noticing a difference in Tony’s social media posts. They were all about contacting him directly for training and did not mention the gym at all. Luke asked Tony to remember to promote the gym as well when posting. Cross-promoting is an important tool in the platform of social media marketing. Tony said he would and acted like it was just an oversight on his part. The two friends continued on working together because there was no issue. Tony just had made a few mistakes by not cross-promoting the gym. No biggie.

*Promoting is crucial to the success of your business. Having your team and your clients and other businesses promote the business will inspire positivity and growth. Back in the day, the best type of business promotion was by word of mouth. That still is effective but cross-promoting is hands down the most effective because it reaches so many people/ potential clients. The same thing goes for the others promoting your business. When you and your business promote them, it helps them to build and improve their image.

A week later, Luke found out that Tony was getting ready to open his own gym. He set up a gym right down the street. It literally was only two blocks away. Tony told Luke that he was leaving. He explained to Luke that he wanted his own business. Off he went to open it. He had contacted as many clients as he could and tried to recruit them to leave Luke’s gym and come to his gym. Luke was blindsided completely. Not to mention, he was pretty hurt by this, both financially and emotionally.

Now this could have been avoided. If Luke gave all of his employees a noncompete he could have protected his business from being depleted of clients quickly and unexpectedly. That is such a hard thing to bounce back from. No matter what the relationship is, do not run your business based on the idealism of loyalty and friendship. Employees will come and go. It does not have to be a negative thing for your business. It can often be a proud moment to watch an employee fly off to do their own thing. It is the way that it’s done that makes or breaks the situation. So do yourself a favor and get past the awkwardness and make sure everyone signs a noncompete agreement.

Questions

Journal

What did you take from this chapter?