When Employees Become the Competition

[togwt]

When Employees Become the Competition | Entrepreneur.com



From the article link:



When Employees Become the Competition



While traveling in Pennsylvania recently, I stopped off in Pittsburgh to visit Nick Vacco, a serial entrepreneur.



Vacco’s 13-year-old company, Detail King, is an auto-detailer training company. Vacco got his start in college when he ran an auto-detailing business out of the trunk of his car.



While touring his training facility, I overheard a student from Tampa, Fla., ask Vacco how to get past a concern she has about hiring and training employees, sensing that some will turn around and run their own auto-detailing business in direct competition with hers.



It’s a good question, and Nick had a number of thoughts on it worth sharing:



Paranoia will destroy ya: Don’t assume that a job applicant wants anything more than just a job. Otherwise, you’re operating from a position of paranoia, Vacco says, and you can’t run a business from a standpoint of fear. Besides, if you insist on hiring people with no ambition, good luck with that. It’ll be reflected in every task they do.



Related: Noncompete Expired, a Serial Entrepreneur Seeks Repeat Success



Use a noncompete agreement: You could ask new hires to sign a noncompete agreement, and if your state enforces such agreements, you can make signing one a nonnegotiable condition for working at your business. But check with a lawyer first, because holding an employee to it can be a balancing act between an employer’s right to protect her own interests and a worker’s right to set up his own shop.



Listen carefully during the interview: You want to hire the right people -- people ready to get down to work, not people looking to start their own business. Ask prospective employees where they see themselves in three years. If they say they want to start their own business in your vertical, it should give you pause. But if they say they want to be working for your company with more responsibility and money, then you may want to seriously consider handing them a time card.



Competition isn’t always a bad thing: Competition pushes us to do better, Vacco says. And in this socially-charged marketplace where consumers are constantly sharing their views and opinions of the businesses they interact with, you have the opportunity to gain critical insight into what it is your competition is doing well, and not so well, just by listening. Take that information and use it to differentiate your business and do a better job.

[Ron Ketcham]

Jon, I have always believed that when an employee leaves and becomes successful, I have succeeded as a person, a mentor and once I put the first emotion away, I am pleased.

Their success means that I have been a good teacher, leader and mentor.

It is not a time to be jealous, to be angry, rather it is time to reflect on one`s abilities to be a posistive force in this world.

Grumpy

[David Fermani]

Jon - Thanks for sharing this. I cut & pasted the article into your OP.



I think there`s a big difference between mentoring someone to be a leader and being cautious about them underhandidly taking business from you. I`ve had both actually. You can try to have them sign a non-compete agreement but it is more of a deterant, rather then enforceable by law (in most states). Another reason to have the main 1 on 1 relationship with the client and not your employee. It can protect what you have worked hard at building. Another way I`ve heard some shop owners trying is to not share your product choices with your employees. Tear the labels off or put them in generic bottles.

[Nth Degree]

If the student surpasses the teacher, then the teacher should take notes and learn from the student. It is one thing for an employee to become competition, but another if they steal current clients. Great point, David, about having that 1 on 1 relationship with clients.



Typically an employee who branches out on their own will still have less technical knowledge and skill. If they start outperforming you in business it is a sign that you have been failing in some regard. If an employee is capable of creating that much additional business it would be best to use that to your advantage. Make them a partner (say 35-45%) and expand to a second location. They have no incentive to steal existing clients and you can continue to benefit from their drive.

[imported_dfazekas]

Another reason to have the main 1 on 1 relationship with the client and not your employee.

Exactly. Know an older gentleman in my area that owns a wrecker company. He over the years he let his relationship with his clients slip and now people are coming in and taking business from him. Developing and maintaining relationships is a huge part of the service industry.

[C. Charles Hahn]

If the student surpasses the teacher, then the teacher should take notes and learn from the student. It is one thing for an employee to become competition, but another if they steal current clients. Great point, David, about having that 1 on 1 relationship with clients.



Typically an employee who branches out on their own will still have less technical knowledge and skill. If they start outperforming you in business it is a sign that you have been failing in some regard. If an employee is capable of creating that much additional business it would be best to use that to your advantage. Make them a partner (say 35-45%) and expand to a second location. They have no incentive to steal existing clients and you can continue to benefit from their drive.

Exactly! I`ve always felt that the most successful and effective business owners are those who are willing and able to recognize their shortcomings and accept what others point out to them about how to overcome those weaknesses. Not many people can be the best as both technicians AND business owners. Those who are too hard-headed to see this are limiting the amount of success they can achieve in the long run.

[togwt]

If the student surpasses the teacher, then the teacher should take notes and learn from the student. It is one thing for an employee to become competition, but another if they steal current clients. Great point, David, about having that 1 on 1 relationship with clients.



Typically an employee who branches out on their own will still have less technical knowledge and skill. If they start outperforming you in business it is a sign that you have been failing in some regard. If an employee is capable of creating that much additional business it would be best to use that to your advantage. Make them a partner (say 35-45%) and expand to a second location. They have no incentive to steal existing clients and you can continue to benefit from their drive.

[each one / teach one, then the student becomes a teacher]

[safetyman2010]

I`ve had several former staff (that I know about, could be more) try and open up and become a competitor. All have failed miserably. Detailing is a tough gig and not for the faint of heart - many think it`s an easy way to make money and fall flat on their face when they are the main man in charge instead of the employee following orders. Not something I would really worry about with 95% of the guys you will ever have work for you

[millennium627]

I`ve had 4 customers that tried to open their own shops and all ended coming to me asking for help. My shop is very busy and popular so I guess some people feel that they can open a fly by night shop and be as successful. I don`t mind helping but I am not a fan of sneaky people.

[safetyman2010]

I`ve had 4 customers that tried to open their own shops and all ended coming to me asking for help. My shop is very busy and popular so I guess some people feel that they can open a fly by night shop and be as successful. I don`t mind helping but I am not a fan of sneaky people.

The cost factor presents a pretty low barrier to entry for people to throw their hat in and try to get into the business so there will always be a ton of people coming and going. My best story was a kid that worked for the first couple of years we were open. My father was going to France for the summer so I was going to be under the gun running everything by myself and this kid waited until after he left and then quit on the first day he was gone telling me he got a job at the local Ford plant. I was actually happy for him when he told me and then within a week I got a phone call from the fleet manager of a drug store chain we were the preferred vendor for telling me the kid had gone and rented a bay in a little used car dealer and was calling all my wholesale clients and trying to undercut us by $25 a car. What was funny was the fleet manager was a friend of my Dad`s and the owner of the dealership he approached was also a close friend of the family. He got NOTHING. He showed up at my shop several times every week over the summer to say hi thinking we didn`t know until I finally asked him how his little detailing business was going. He was shocked and sheepishly told me "sorry but I was just trying to make money". People don`t appreciate dealing with shady characters that do things like that and that kid found out the hard way. I`ve had customers tell me they always wanted to open up a shop but they`re usually in their 50`s and ill prepared for the workload this business requires

[C. Charles Hahn]

The cost factor presents a pretty low barrier to entry for people to throw their hat in and try to get into the business so there will always be a ton of people coming and going. My best story was a kid that worked for the first couple of years we were open. My father was going to France for the summer so I was going to be under the gun running everything by myself and this kid waited until after he left and then quit on the first day he was gone telling me he got a job at the local Ford plant. I was actually happy for him when he told me and then within a week I got a phone call from the fleet manager of a drug store chain we were the preferred vendor for telling me the kid had gone and rented a bay in a little used car dealer and was calling all my wholesale clients and trying to undercut us by $25 a car. What was funny was the fleet manager was a friend of my Dad`s and the owner of the dealership he approached was also a close friend of the family. He got NOTHING. He showed up at my shop several times every week over the summer to say hi thinking we didn`t know until I finally asked him how his little detailing business was going. He was shocked and sheepishly told me "sorry but I was just trying to make money". People don`t appreciate dealing with shady characters that do things like that and that kid found out the hard way. I`ve had customers tell me they always wanted to open up a shop but they`re usually in their 50`s and ill prepared for the workload this business requires

Funny you mention that... I`ve heard the exact same story before, one being from a guy who thinks it`d be "an easy $75K/year income in his retirement."



Riiiiiight.

[safetyman2010]

Funny you mention that... I`ve heard the exact same story before, one being from a guy who thinks it`d be "an easy $75K/year income in his retirement."



Riiiiiight.

My cousin actually came to me about investing in a detailing business that was going to be run by a middle aged guy that "was sick of the corporate life" at his company and was going to start detailing. His plan? do 4 full details a day @ $75 a day and he was going to make it big. I threw up a dozen or so red flags but he just refused to listen and just kept saying "this guy knows what he`s doing". megafacepalm

[Ron Ketcham]

Jon, Nick picked my brain a year of so before he started his car care chemical business.

I sent him everything he asked for, I talked to him for hours on the phone about the business, the way "detailers" think, what they expect. etc. even provided him the PrepExcellence Training Manual and the process wall charts we provided for the OEM`s, etc.

He committed to come down to Cincy for the training course, but at the last minute, changed his mind and we heard nothing from him after that.

He fell off the radar until he started his own company and guess what, we had given him the blue print.

Mistake on our part, maybe, pissed, maybe, but in the long run, his little company produces sales, profits, etc in a year what Automotive International produces in 2 to 3 weeks.

He`s not a bad guy, and I still wish him well, but there is a difference between his sort of business and that of Automotive International`s.

AI is a professional oriented company, doing it`s main business with the vehicle manufacturers and their dealerships, port operations, factories, etc, around the world. Nick is still working everyday to find some start up detailers who will buy his products, and those people come and go in a heart beat.

Grumpy

[Scottwax]

Just because someone may be a good detailer doesn`t mean he/she is also a good at running a business.

[togwt]

Starting a business is not hard to do, nor does it cost a lot of money. However, just like any business it needs to be done correctly. Many who get started don`t set up the business correctly in the beginning stages and end up either loosing or completely folding up; a large percentage of fail within the first 18 months of getting started.



There are two main reasons; they don`t know how to run a business and don`t have enough knowledge to keep it up. And they are usually much undercapitalized to support their business until they do learn how to make it work. Basically, they run out of capital before they make a profit, this unfortunately is very common in many businesses today



Being good at what you do is 25% the balance is business acumen, client relationships and marketing yourself and your services and product. Strive to offer customer-focused services that differentiate your company from the competition. Ensure that your marketing focuses on customer’s needs as opposed to what you think they want. Making the other person think that they’ve got a good deal; and always try to exceed customer expectations