my friends and family are warning me not to hire employees for my small business

A reader writes:

My consulting business is finally picking up after years of being stagnant. I’m getting to the point where I’m getting more work and more clients than I can handle, and I’m thinking it might be time to look towards bringing someone on board to help me. This person would be another professional doing the same work I currently do. My goal has always been to scale up my business, and this seems like a good time to work on doing that.

Two or three close friends and relatives I’ve talked to have said I shouldn’t do this, because the employee will resent me making money off their work and leave me and steal all my clients, and there will be nothing I can do about it. This is presented as something that will happen with 100% certainty. I’ve been told “you should expect this to happen.” I’m told I shouldn’t hire anyone more talented than me because they’ll take over and force me out, or anyone less talented because they’ll hurt my reputation. The people telling me this are small business owners themselves.

I’m skeptical of the endless negativity because there are many businesses like mine that do have employees and have been successful and not had their clients stolen. I’ve never hired an employee before, for my business or for anyone else’s, so obviously I don’t know what the actual risk level is for something like this. Are there any obvious risks I’m missing? Also are there any general principles I should keep in mind if I do move in this direction?

Your friends and family who are telling you this are being weird and are off-base.

“The employee will resent me making money off their work and leave me and steal all my clients, and there will be nothing I can do about it.” So … how do they think businesses (big or small) hire anyone at all? What they’re saying wouldn’t just be limited to people like you who are hiring their first employee. If they think this is how people operated, why wouldn’t it be true of any employee working in a client-based job?

I mean, yes, there are certainly people like that out there. But they’re not the majority, and the fact that they exist isn’t reason to not hire anyone. It’s reason to do good screening and make sure that you’re hiring a trustworthy and ethical person and that you’re being clear about what they’ll be bringing to the business versus what you’re bringing to it.

And really, many, many people don’t want to be entrepreneurs and instead are thrilled to have someone else doing the business development, taking care of overhead, and carrying most of the risk, while providing them with a steady and reliable paycheck.

Plus, you can take reasonable precautions to ensure that whoever you hire doesn’t end up stealing your clients later — like by having the employee sign an agreement not to solicit your clients or leave with client data. (But have a lawyer draft this for you, because if it’s too broad it won’t be enforceable.)

As for the idea that you shouldn’t hire someone more talented than you —you should strive to hire people more talented than you, because that’s the best way to grow your business. You want people who bring strengths that you don’t have. You want people who are awesome at what they do. And assuming that you are reasonably good at what you do, that’s not going to be a threat.

(In the interests of a full and complete answer, sure, if you’re pretty bad at what you do, having someone highly competent working alongside of you can highlight your weaknesses. But not having someone competent in your business isn’t exactly a better plan. And regardless, I doubt you’re in that situation, if you’re doing well enough to be in a position to start hiring employees.)

All this said, it could be interesting to find out if your friends and family are speaking from personal experience, and if they are, to get details about what happened to them. I bet that if they did get screwed over in this way, if you get enough details about what happened, you’ll be able to pretty easily spot the mistakes they made that led to it (in how they hired, in how they managed the person, or in how they set up the relationship at the start) — and there will be good lessons in there to take forward with you.

{ 116 comments… read them below }

  1. Dawn

    Yeah this makes *zero* sense. The only way I can possibly see this making sense is if the people giving you advice have a habit of hiring employees hoping that they’ll improve in some way after they are hired and then they don’t… but other than that, I have nothing.

    If you’re looking to hire someone on to help, just follow AAM’s advice about hiring people and make sure that you vibe really well with whoever you hire and keep lines of communication open after they’re hired.

    1. OP

      At least one person I’ve talked to has been in the position of the employee who left to start his own business, and he apparently wants to protect me from hiring people like him. He is pretty well known in his field, so maybe he’s not the kind of guy who needs to be working for anyone else.

      I don’t any of the others have ever hired employees other than more peripheral staff like administrative and salespeople, not people who would be performing the same job function as them. So I’m especially interested to hear replies from people here, because I don’t really have anywhere else to get solid advice from people who know what they’re talking about.

      1. AdAgencyChick

        I’ve never worked for an agency smaller than 50 people, but no matter what the size, agencies make you sign agreements at the time of your hire to prevent anyone walking out and taking their clients with them. Usually we are not asked to sign anything saying we will not work for a competitor, but we always have to sign something saying we will not attempt to solicit any client away from the company for a certain period of time after leaving the job (usually 2 years).

        A friend of mine who recently struck out on her own as a consultant after working for a small firm (different industry), has made all of her employees sign something similar since she started growing her business beyond herself.

      2. Lucky

        Since you’re here seeking advice, OP, Alison is spot on to advise that you consult with an attorney to draft a confidentiality & non-solicitation agreement (and add in a non-compete provision, if appropriate and if it would be enforceable in your jurisdiction, i.e., not California.) A small client-focused business can be devastated by a former employee poaching clients.

        Also, consider (if you haven’t yet, which you probably have because AAM readers are smart & savvy cookies) talking to your accountant to make sure that you’re properly set up to pay payroll taxes, workers’ comp, etc. Another way small businesses can fail in this stage is to be hit by a large tax bill plus penalties, when they’ve failed to budget and prepare for these costs.

        Good luck!

        1. Stranger than fiction

          I would also add to do a thorough background and reference check to suss out if they’ve ever done something like poach clients at previous jobs.

      3. misspiggy

        Assuming any consultants you recruit would be less like this guy and more like decent human beings, it may be worth having levels of flexibility in how they operate. I’m an experienced consultant with a good network of my own, and I go in on bids with several larger agencies. They contact me for a project, we agree a fee and a contract. I also work as a more integral part of a small consultancy group. Junior members get all their work through this group. I’ll take contracts from the group, and will also try to bring in work for it. If I’m offered work from a contact I made via the group, I set the contract up through the group. If a one-person piece of work comes in from a pre-existing contact of mine, I set it up directly and not through the group, which often means I get to charge more.

        TL:DR – flexible arrangements can be made in consultancy to keep people happy to stay working with you.

        1. OP

          To be fair to this guy, he didn’t actually ever steal clients from anyone; it just occurs to him as a thing you should expect people to do. I didn’t intend to make him sound like a snake.

          Those arrangements make a lot of sense. The agencies I work for specifically don’t allow me to use subcontractors of any kind for the clients they bring me, so it would only be for clients who signed on directly with me who would be dealing with subcontractors at all. But you’re right, I’m sure there would be arrangements that would be easy enough to set up.

          1. Not So NewReader

            People rise or sink to the level we expect them to. If you treat employees as if they will rob you at any moment, then you will get just that… employees that will rob you at any moment.

            If you are looking for mentors for your biz, try to stay away from the Negative Nancys and Normans of the world. This guy has not explained to you how to protect yourself from client stealing, all he has done is the adult version of Eyeore. I am sure you will see plenty of advice here. My thought is, if you have a person who is a go-getter why not set him up with a satellite office? Let him “steal” all the clients he wants, they are still doing business with you. People that feel they are growing/learning/contributing are less apt to do something underhanded.

            1. Brooke

              “People rise or sink to the level we expect them to.”

              I agree to a certain extent, though people’s behaviors certainly have a lot to do with their own issues rather just the expectations of others.

        1. SL #2

          References from both former employees and from former clients, if possible! We have a pool of sub-contractors that we’ve worked with for years, but if we bring anyone new into that pool, we always ask for client references if they’ve been consulting for long enough.

      4. fposte

        I also think this is the common thing where people want to warn you against the pitfall they encountered whether it was rare or common or even correctly extrapolated. “I applied to the Teapots job and didn’t get an interview, so don’t bother applying there!” or “I applied to the Teapots job and didn’t get an interview, so they’re not looking at anybody with a degree from outside the Ivies.”

          1. fposte

            And especially with parenting, some people are just like that–they warn against risk because they hate to think of anything going wrong for their kid.

            1. Blurgle

              Parents are sometimes also guilty of seeing their kids as naive, “book-smart” children (who aren’t competent or intelligent enough to hire staff) well after they become productive adults.

              I find these are the same adults who boast about their children being “unsophisticated” – if that was ever not a vile insult.

      5. Jerry Vandesic

        “At least one person I’ve talked to has been in the position of the employee who left to start his own business …”

        This happens. It’s just part of the working world. The person you talked to probably worked for someone before they had their own business, and they obviously left to start that business.

        If you hire someone, you need to take care in that hiring decision, and then you need to treat the employee well so that they don’t soon leave. But you can’t expect that the person you hire will never leave. Help them grow in their career. They will be a better employee, but you also need to realize that others will see them as better also, so you might lose them. If they become really good and indispensable, consider adding them as a partner. Give them a reason to stay with you other than a paycheck (they can get a paycheck from any company).

        1. Meg Murry

          Yes, this is what I was going to say. Chances are the person you hire will leave eventually, either to start their own business, to work for someone else, or to go into a different field altogether. So when you hire someone, you just need to keep that in mind, and make sure you are making decisions that make sense in both the short and long term.

          I also agree with others that you need to look at what role you want another person to fill. Do you want another clone of yourself, who would do an equal amount of consulting and bringing in business, but you could share office space and assist each other? You are looking at more of a partner than employee. Or do you want to concentrate on the business development and billing end, and have the other person be doing just 100% consulting? Or the opposite – do you need a business manager to handle more of the paperwork from you, so you can focus more on the consulting work, or less on the billing/paying bills/sending estimates/paying taxes/balancing the checkbook/paperwork end of things? Or do you want someone junior who can handle some of the more basic tasks, while you handle the bigger items?

        2. Decimus

          Actually that could be a great solution to the problem depending, again, on what you want. If you DO want someone to do an equal share or eventually work up to that, hire on a new person and indicate if they do a good job you WILL make them a partner (note you are allowed to offer them a chance to buy-in if you want to cover any initial outlay of resources on your part for equipment and such). Do consult an attorney of course. But even an ambitious person would probably prefer to become a partner in an existing, successful business than risk the hassle of starting their own.

        3. Not So NewReader

          Love this. Sometimes people are better at our jobs than we are and they move on to bigger and better. This is reality. They are employees, not hostages. If you give someone a launch on their way to greatness, that is a feather in your cap. This is something that you have had a hand in creating and through this person you have sent out a ripple that impacts many.

      6. Lisa

        But starting his own business doesn’t equal stealing your current clients. Put a clause in client contracts saying they can’t poach your employees or use their services for at least 1 year if said employee begins offering similar services.

        Then have the employee sign a non-compete that says – can’t steal clients, other employees or prospects that were engaged in convos while the employee worked for you, and can’t work for a client for up to one year after leaving the company.

        1. Jerry Vandesic

          If you do use a no-poaching clause, you should also add wording about liquidated damages to explicitly state how much any poaching would cost the ex-employee. In one agreement with an employer, the wording looked like this:

          “You agree that the exact damages to employer due to a breach would be difficult to determine. Accordingly, if the event that you do breach through a contractual relationship with an existing client of employer within one year of termination of employment, you will purchase from employer the goodwill associated with such clients. You agree that the purchase price of the goodwill will be $100,000 or 50% of the amount of the contract, whichever is greater.”

  2. KT

    This is bizarre to me. Hiring smarter people is just good business sense!

    And yes to Alison’s suggestion of a lawyer–they can draft a non-compete agreement or client-privacy waiver which would eliminate that risk.

    1. Jerry Vandesic

      The best management advice I ever received was from the CEO of a company I was interviewing with. She said that she always tried to hire people smarter than her. She realized that she can’t know everything, so having smart people around her was critical to cover all aspects of the business.

  3. AcidMeFlux

    Yeah, if you hire someone to help you handle more clients, there’s a small chance that you’ll lose a client to your subcontractor. But if you don’t hire someone to help you, and you just can’t take on the extra work, you won’t have that client in the first place (so you’ll “lose” them before you even have them.)

    1. INFJ

      This is how I see it, too. What OP has to lose in worst case scenario of hiring someone isn’t much worse than the risks of not hiring.

  4. the gold digger

    I’m told I shouldn’t hire anyone more talented than me

    When I was in grad school, when we had group projects, many of my classmates would choose team members just like themselves.

    I was already very keenly aware of my weaknesses by then – I am not a detail person and indeed I hate details, I hate doing the fine, detailed numbers work, I hate ticking and tying numbers – so I always tried to get in groups with people who were good at the things I am bad at.

    It’s worked well in the working world, too. I am not afraid to take action, which can be a strength, but it can also be a weakness if you haven’t really vetted your plan. So even though it makes me crazy to have someone on my team asking, “Wait! Did you think about A? Did you think about B?” I know I need that person and am happy (in theory) to have her.

    1. Anx

      And I’m that other person!

      I like to have a few other pitfall-spotters around me, but I really need people on my team to carry me between the super enthusiastic idealistic vision phase into the action phase, otherwise I get mired in avoiding the pitfalls and stall on putting things into action.

      1. the gold digger

        Anx, we would work well together!

        I am married to a pitfall-spotter. We are right now having a discussion about whether we can possibly even consider taking the credit card and utility bills from the past seven years to the shredding day at the library this weekend. WHAT IF WE SHRED THE WRONG THING? WHAT IF WE NEED THAT PHONE BILL FROM 2012? IT COULD HAPPEN!

        1. Marcela

          Hahahaha, when we moved last time, every single day we had a conversation like that. He was, all the time, reminding me that the space and weight in our pod was limited, but every time I opened a folder of documents to destroy it, he would look at me with very worried eyes and ask me “but, but, what are going to do if we need those?!”.

  5. Apollo Warbucks

    As for the idea that you shouldn’t hire someone more talented than you –

    If you’re the smartest person in the room, you’re in the wrong room.

    1. AVP

      That’s really good.

      The best hiring advice my boss ever learned was that A people want to work with other A people. When we started hiring to get the best people we could, rather than just who was around at the time and looked okay, our business changed so much for the better.

    2. Liza

      Do you work with me? That’s been one of the inspirational messages on the screens around work this past week or so.

  6. V

    Employees who are treated well (good salary and benefits, reasonable boss, reasonable hours and deadlines, opportunity for advancement, etc.) and get to do interesting/challenging work are not looking to sabotage their employer. If anything, they want the business to do well so that they can grow with it.

    1. the minion

      This is very, very true. I encountered the same problem (although it wasn’t consulting) when hiring my first employees. I own a hand-made designs business and had to teach someone to basically replicate my work…and the biggest nightmare was that this person would steal the designs and start their own thing. Except for signing the paperwork with non compete etc., I did my best to really read between the lines during interviews. What are their goals professionally and personally and what do they hope to accomplish by working here. Some admitted that they’d like to own their own biz one day and this would provide insight into that, but others wanted a crafty/creative job. So finding the person that is right for your biz and also actually wants to do this is a combination of all these things and then keeping them by treating them well is the key for retention and growth (I see my employees genuinely wanting my business to succeed).

  7. T3k

    I remember this book we had to read for one college class and in it, the author talked about how he was taught that if he wanted to be successful with his job, finances, etc. he should hire those who knew the field better than him and pay them well for it.

    1. Rae

      Allison, I’ve tried to post my comment a few times. Are there key words that make it so I can’t post? Some of my comments are showing but not others….I’ve looked across different browsers

      1. Apollo Warbucks

        Sometimes comments go in to moderation but unless you have an email address entered when you submit your comment there is no sign that they are waiting to be released. I guess the comments are still there are Alison will release them when she sees them.

      2. Not me

        Sometimes things catch in the spam filter, and she’ll unscreen it when she sees it. Comments containing URLs or email addresses are the only ones that I have noticed *always* being screened.

    2. Kyrielle

      URLs and certain words get screened, but sometimes the comment screener just gets overzealous (literally – Alison has mentioned it in the past).

      If you add an email when you submit it, you’ll see the comment with (awaiting moderation) and we won’t see your email (but we will see the Gravatar associated with it, if you have created one – so bear that in mind).

  8. Rae

    What your family may not think about is that not everyone wants to do all the annoying business ownership stuff on their own. My dad and I are the same in that respect. We both are idea people. He works for “major IT corporation” and I work for “large education NPO”. We both are talented at what we do, and we both could probably take our skills and do our own thing as much of our jobs are consulting and designing. For many years he considered this, but in the end he likes that he doesn’t have to handle billing besides dropping off a bill, that he can take days off with no worries and that he has legal backing, healthcare, per deim and a supervisor to run things by. Even though I’m at the start of my career in the scope of a working life, I agree. These “perks” could make or break my love of what I actually do.

    Now, you might not be able to provide all of the perks that a big IT company can…or even an well-off NPO…but you will provide other things that can prove to be what someone else needs.

    Out of curiosity…could this be sour grapes if none of them are qualified to work with you?

    1. alter_ego

      Yeah, my mom owns her own business, with employees and such, and has owned it my whole life. I NEVER want to have to do that. It’s so much stress for her, she has no options to shut off, and in lean months during the recession, it was a choice for her between cutting herself a paycheck, vs. being able to pay her employees. She’s an awesome employer, and it was never a question that it would be her employees getting paid, but I know it must have been incredibly stressful for her. I’m totally content with the knowledge that I will receive a paycheck every two weeks, and know exactly how much it will be for, and not have to worry where that money is coming from, specifically. Plus, I like being an engineer. I don’t want to have to learn about taxes and payroll and businessy stuff.

    2. LawBee

      Yes indeed. A fair number of my friends/family/randos want to know when I’m opening my own firm. NEVER EVER OMG NEVER. I *like* having someone else responsible for finding clients, vetting them, paying bills, and ensuring that I have a paycheck every two weeks, thank you.

  9. 2 Cents

    Speaking as someone who has no interest in being an entrepreneur, but every interest in supporting those who are big-picture people, I know there are others like me out there. Appreciate your employee’s work, be responsive, teach them some things, give them room for advancement, and tap into their strengths, and you shouldn’t have (too many) problems.

    1. PEBCAK

      Indeed. When I was freelance, I hated selling my services, negotiating, billing, etc. I’d much rather work for someone who handles all of that.

      1. Not the Droid You are Looking For

        I used to do a lot of freelance work. It started as small referrals and requests for help from friends, but then grew a bit (not enough for me to quit my full-time job), and I hated it.

        I loved working with the clients to realize their vision, but I hated contracts, invoicing, and business development. This experience was so incredibly valuable as I learned that I did not want to work for myself and that I was really happier working for someone else.

    2. mskyle

      Yeah, I think a lot of entrepreneurs think that everyone wants to be an entrepreneur – not the case! I just want to do good work and get paid good money.

      1. Not me

        +1

        I want to do it about as much as I want to eat a Carolina Reaper.

        It’s impressive if somebody else does it, but I’m not taking the pepper out of their hand to try it myself.

    3. Anx

      Yep, this.

      I have absolutely no capital. Entrepeneurship is not for me. I think so long as I was receiving some sort of credit for my work outside of the paycheck, I would much prefer to be an employee.

  10. Rae

    I think what it boils down to is that not everyone wants to be a business owner. All the legal contracts in the world have absolutely no meaning to me because there isn’t a force in the world that would make me want to take on the risks of owning my own business.

    Out of curiosity, could this be a case of sour grapes via family? People who feel scorned can come up with some pretty silly opinions.

      1. Not So NewReader

        It sounds like there is a lot of fear going on there. One solid way to combat fear is to collect facts and ideas, which, happily you are already doing right here. One should always take what worries them and try to learn more about it.

  11. LQ

    This is super weird. All huge successful businesses have more than one person. Aiming to never hire anyone sounds like keeping your business a hobby forever.

    I worked with a lot of small business owners and they are a special group. I have no desire to go into business for myself* but that wouldn’t make me a bad employee, just one who wants to leave when done with work, or doesn’t want to spend all my time focused on the crummy parts of making clients happy and all the random weird stuff. I like the work I do and want to do the work I do and yay for having someone else handle the other ish!

    There is extra work once you hire people, so that’s worth being aware of, but it’s not a reason to not do it, it’s a reason to consider a payroll company or the like.

    And congratulations on growing your business!

    1. OP

      Thank you, I appreciate that. I do think sometimes people who care about you have a hard time seeing you do something with your life that they didn’t expect from you or that they deem too risky for you. Keeping the business a hobby seems like a safe and known path, so it’s the path some people think I should be taking.

      1. Not So NewReader

        I’ve commented about this before: I watch people do something, that if I did that I would fall flat on my face. But the other person is fine, they go through it with dignity and grace. Differences in people, I say. Just because Aunt Mary or Cousin Jim has this or that concern/hurdle does not mean you will. You can hammer out an action plan for the concern and keep going.

  12. AndersonDarling

    OP, are you in some kind of service industry? Like massage or stylist? If that’s the case, then yes, someone may work with you but eventually leave to pursue other opportunities. It doesn’t make a difference if you are a big company or a small business, your employees will move on at some point and some may want to open their own shop when they do.
    But that is why you have the contracts that Alison mentioned to prevent someone stealing your clients. They are very common in these industries and everyone I know takes them seriously.

    1. OP

      It’s graduate school admissions consulting and standardized test prep. “Consulting” is probably not the best word to use, but I thought I should be vague.

      1. Meg Murry

        In that case, I would be more concerned that they would steal my materials (if you put together some kind of presentation or course) than my clients. Make sure any contracts you sign have something to that effect. I feel like instead of completely forming their own business, this is the kind of thing where a dishonest person might teach one class for you for $X all aboveboard, and then moonlight with your same materials on the side under the table. I went through training to be a tutor for one of the big names in test prep, and we had to sign all kinds of paperwork saying that we couldn’t use their materials on our own for private tutoring.

        1. OP

          I’ve had to sign those too working as a contractor for test prep companies, and years ago when I worked as an employee I had to sign NCAs saying I wouldn’t so much as help a relative with their homework while I was an employee of that company. I know NCAs like that aren’t typically enforceable, but it seems like this kind of struggle is probably inevitable.

          My thought was instead of farming out work to a subcontractor or part-time employee, I could work on bringing on a full-time person who would be involved in things like curriculum development. I definitely don’t want to get into the kind of situation you mentioned.

          1. Rae

            Not able to help family? That’s just silly. Would they be going to go after you for breech of contract helping your 8yo niece with fractions? Some NCA’s are just plan overbearing

            1. Anx

              I wouldn’t be surprised. I thought my NCA for a tutoring center was pretty obnoxious, considering you were a part-time worker with unreliable shifts, and not that many.

              But they do provide a space for you to work. That’s the main barrier to tutoring privately; I don’t have a table at home and my apartment is just not conducive to running any sort of a business, and there’s no way I could afford to rent space.

              1. OP

                I did a lot of tutoring at Starbucks and libraries before I was able to get my own office/retail space. Some universities will let you rent out lecture halls or small classrooms for a reasonable fee if you need to teach a large class.

                1. Anx

                  I didn’t know that about the university libraries.

                  I always felt weird about doing business at another business, and my local libraries don’t allow business transactions. So the university library may be reasonable (but since it’s tutoring, I’m not sure I could get the fee low enough).

                2. OP

                  Yeah, my alma mater actually lets you use their library classrooms for free with a student ID (or at least they let me when I was still enrolled) so I never even had to pay for that. I got whiteboards and everything.

                3. OP

                  But yeah, you do want to check first if they’re okay with you conducting business transactions in their space. Some of them might not be.

                4. another academic librarian

                  Just a PSA that different university libraries are going to have different policies about their teaching spaces, study rooms, etc., so it’s best to check with the individual library about availability before assuming that all university libraries operate the same way.

  13. Ambee

    If you’re turning down work because you’re in such demand, you might also consider raising your rates in conjunction with hiring an employee. That’s always been the flag for me that I’m not charging enough! :)

  14. Anonymous Educator

    Others have alluded to this solution, but you don’t want to hire just another you—you really want to find an employee to complement you. Yes, there will necessarily be some overlap in skills and the whole point is to divvy up the work. Still, there should be things you do, as the business owner, that the employee does not do, and vice versa.

    As Alison mentioned, have a lawyer draft up a non-compete agreement the employee signs and be very clear about what her duties are and what your duties are. Do your best to make sure she’s ethical and to make sure she’s not a budding entrepreneur. Yes, there are many people who are extremely talented who have zero interest in running their own businesses. Find those people instead of the people who just want to splinter off your clients.

  15. V8

    I know of a small, artisanal food shop where two people were hired as buyers. They really helped grow the business and after two years, they both left, opened up their own competing small, artisanal food shop and took 60% of the wholesale clients with them.

    The original small, artisanal food shop still does not require new employees to sign a non-compete form.

      1. SL #2

        +1

        You don’t lose 60% of your customer base just because someone else offers a better deal… it’s a reflection on your own business.

        1. Anx

          I think it depends. I shop at places I don’t really like if it saves me a buck out of necessity. I would shop much differently if I had the means.

          But between 2 artisanal food shops, that’s probably not as large of a factor.

          (My friends and I joke about how much we love certain new shops or restaurants, and hope they stay in business long enough for us to be able to afford to go one day)

      2. Rae

        Cult of personality. Sometimes it’s about the people and not about the purchase. Heck, there’s a funny old lady and a handicapped young man who work together at the register in local chain supermarket. I love seeing them and that does affect my decision of where to shop, there’s 8+ chain supermarkets in a 10 mile radius but I go there even if it costs me a couple of bucks more.

        1. fposte

          Sure, we make those choices, but usually something fairly significant has to cause us to change the pattern once it’s established. We had pretty much the exact situation V8 describes in my town with a food shop, and the second one closed after a few months because it didn’t offer anything superior to the first one, so why would people stop shopping at the first one?

          If most of your customers are coming in because of a charismatic individual, a business owner should be aware of that and should compensate accordingly. I think that’s pretty common with bars and star bartenders, for instance.

          1. LBK

            Oh, the bartender example is great – I do actually have a group of friends who followed a bartender around as he changed bars because they came for his service and expertise, not necessarily for the bar he was at. But I think bartending is a unique industry where you’re more likely to follow a person because your personal connection can directly correlate to a massive difference in the service you get. The autonomy bartenders usually have over preferential treatment for their favorites is huge relative to most industries – where else can you potentially get a 100% discount with no management authorization required as long as you leave a good tip?

            Bar preferences also aren’t as heavily driven by convenience as many other service industry businesses – sure, I had regulars I would give free drinks to when I was a barista, but I knew the main reason they came there as opposed to another location was because it was the most convenient one on their way to work.

      3. LBK

        My exact thoughts on the whole situation. If someone can come in, work for you for a relatively short time and then steal away a large chunk of your client base, well…maybe you were the problem, not that employee.

        1. V8

          I think the buyers went out and cultivated the relationships, so the only contact the wholesale clients had with the store was through these buyers. So when the buyers left, the clients wanted to keep working with those specific people.

          1. LBK

            I can certainly see that argument, but I can also see that if you trusted the company as a whole enough you’d stick with the company and trust them to hire an equally good replacement.

          2. fposte

            Maybe somebody in retail can shed light, but that sounds like an exclusivity I just don’t see in my area. Wholesale clients seem happy to work with anybody who can pay them, so I don’t see why they wouldn’t just sell to both stores.

            I wonder if a problem was that the old store fumbled the buying a bit when trying to replace the two who departed.

            1. V8

              The wholesale clients were purchasing, not selling.

              Like a bar or restaurant would order 2 pounds of cheese for appetizer plates or six boxes of a particular cracker or 25 in-house made cookies.

  16. V2

    An employee certainly couldn’t force you out of the business no matter how talented they were; ultimately it’s your business.

  17. SL #2

    I work for a consultant who has created her own business. She openly admits that she always aims to hire smart and talented employees to make sure she was always up to her own standards and was not getting complacent in her work. That’s the attitude people should be taking– I’m glad you wrote in to ask about this, OP, because your family and friends cannot be the only ones who think that their own employees are a threat to their business, and it’s good for people to read Alison’s answer.

    1. OP

      I agree, and it certainly makes me feel a lot better about even thinking about doing this. My family is definitely the kind that frowns on risk-taking as a rule, and my parents especially see their most talented employees as people who could leave and destroy them as a result. I know they fear and at least partly resent their dependence on these employees, because they wouldn’t be easy to replace.

      That’s definitely not the mindset I want to have, and from reading everyone’s comments I’m thinking the best thing to do is treat any employee I do hire as well as I possibly can and give them growth opportunities, decision-making power, and so on. I may not even be ready to do that yet, but when I am I’ll be much clearer about where to start.

      1. SL #2

        I’m certain there are bad apples out there, and there are people who have been burned by someone jumping ship and taking their clients with them. But it doesn’t seem like a reasonable mentality to have when you’re running a business–you’ll just foster resentment and distrust. You can’t live in fear of your own employees! You hired them presumably because they’re smart and know how to get things done, or else there would be no point in hiring.

      2. One of the Sarahs

        Hey OP, I don’t know if you’ll see this, but I wanted to say congratulations, if your family are mostly risk averse, in starting your own business – that must have been pretty hard, if you were brought up in a risk averse home, and if people aren’t cheering you on. Of course, it’s not all bad, and actually probably better than the helicopter-cheerleader type who think you can do ANYTHING, but running your own business is hard, so congrats on doing it anyway!

        (I’m making no sense, I imagine, but tl;dr = YAY YOU!)

        1. OP

          Thank you, I appreciate the kind words. My family isn’t terribly risk-averse when it comes to themselves, but they definitely don’t like seeing me take risks, so I don’t take these kinds of warnings entirely seriously. I pretty much spend my time and energy hustling until I get to the next level, and then they congratulate me and assure me that this is the level I should now stay at. But some of them are definitely getting better about that.

  18. 42

    >>… because the employee will resent me making money off their work…<<

    This is nonsense. You did all the legwork in finding these clients, and that's why you get a cut of the fees. If the employee resents that, they they are welcome to get clients on their own. Don't your concerned friends and family realize this? Consulting 101.

    1. LBK

      Not to mention, this is basically how businesses in general operate. The people above will always be making money off the work of the people below them.

      1. Not So NewReader

        That one had me shaking my head. If the owner is not making money off my work that means I will not be getting a paycheck.

        Now, if you are an obnoxious boss, OP, who makes many, many times what your employee makes, then there could be problems. It’s not because you make many times what your employee makes. It’s because you’re an obnoxious boss. There is no way to measure how being a decent person can impact your business. But we all know it does.

    2. Eva G.

      During my student years I worked for two consulting companies. The second one grew out of the first, when two employees decided to start their own business and eventually brought two other employees with them. In my understanding, this was not some sort of betrayal, but fairly normal: Ambitious employees spend 5-10 years working really hard and learning how to be good consultants, and then when they have gained enough experience they set off to start doing it their own way (respecting clauses about not soliciting clients). No hard feelings.

    3. Lady H

      Exactly! I am very happy working for my boss because she built up our client base over 20+ years, handles all the paperwork, and is incredibly open to the skills I bring to her business. I’m content letting her handle that part of the business. I’m even content getting paid a lower rate than I would if I struck out on my own because all my time is spent on billable work.

      Also, I can’t imagine successfully stealing her clients when she has worked with some of them for decades. It’s not really that easy to steal long term clients (at least in my industry), because it’s not just about saving some cash. They’re looking for a company who will work efficiently and understand their needs intimately, so hiring someone who left to start a new business would mean having to rebuild all that.

  19. quika

    I was that first employee and over 15 years later I am still there. The key is picking well and meeting the employee’s needs as well as your own. I was a semi-stay at home mom at the time who needed part-time work with some steady income and did not want do run a business. I did want to do meaningful work and grow professionally and be paid decently for my work. I got that. I could have earned more in a traditional firm, but would have worked crazy hours and not had the flexibility I needed. The owner wasn’t sure about taking the step so was happy to have a part-time person to start. The firm added employees over the years, but only one left to start their own firm (and took no clients since the owner made really sure to keep involved, nurture the relationships and provide excellent service to these clients).

  20. MsChanandlerBong

    OP: Are you my husband’s long-lost sibling? His father owns a small manufacturing company, and the whole family’s attitude is that employees are just out to steal from you and make your life miserable. He has one full-time employee who’s been there for about 20 years, but they go through part-timers like water because they treat everyone with suspicion.

    1. OP

      My family definitely isn’t that bad, and they do respect and value their employees, but there’s always an underlying fear and suspicion that was cultivated in me growing up that we’re literally depending on these people to put food on our table and they could leave us at any time and then where would we be. I would like to avoid that kind of jitteriness in my own experience.

  21. aebhel

    As someone who has worked for small businesses, and who knows a lot of people who have worked or are currently working for small businesses, the only reason most sane employees are going to resent their boss is if that boss is treating them poorly.

    My spouse resents his boss the small business owner, but that’s because said boss is engaging in legally and ethically shady business practices, severely underpays his employees, has used non-compete agreements to make spurious legal threats against ex-employees (and in one case an unpaid college intern) who were seeking new work in the field, cannot maintain an organized schedule, regularly takes out his marital problems on his employees, and is just generally a nightmare to work for. If you pay your employees a reasonable wage and treat them fairly, most reasonable people will not go out of their way to destroy your life and business.

    Also, I think I’m a reasonably competent person, and I can’t think of anything I want LESS out of my professional life than running a business. I’m good at what I do; I’d be terrible at the logistics of business ownership.

  22. Kristen

    There are ways to protect yourself from the start of the hiring process through actually hiring someone. During the interview ask very specific questions about their experience and past job history. Reference checks are a must. A non-compete and confidentiality agreement is also a must. You can have a lawyer draw one up for you for minimal cost. Don’t be afraid to expand your business! If you have gotten to the point of needing extra help then you have a good head on your shoulders and will be able to sort out the right candidate for you.

  23. Laura

    As long as you have legally binding confidentiality agreements that have been vetted by a lawyer and that are applicable in most 50 states, you should be OK with hiring someone. You can’t prohibit people to work in the industry though with those iron-clad non-compete agreements that are ethically troubling to say the least.

  24. Honeybee

    And really, many, many people don’t want to be entrepreneurs and instead are thrilled to have someone else doing the business development, taking care of overhead, and carrying most of the risk, while providing them with a steady and reliable paycheck.

    I came to say this. I’ve noticed through reading blogs and other workplace columns that some entrepreneurs seem to believe that everyone wants to be an entrepreneur at heart, and truly do not understand people who don’t want to strike out on their own and would rather work for someone. However, I’d say that the majority of people probably want to work for someone else, and even many of the people who want to own their own business wouldn’t be good at it.

    Personally, I would be thrilled (and am thrilled) to work for someone else and have them handle drumming up business, managing payroll, and taking care of all the other little aspects of business there are. I would much much MUCH rather just focus on doing what I’m good at (which is none of that). So if I worked for a business, I’d have absolutely zero desire to do a hostile takeover from the founder/CEO or steal all their clients and strike out on my own. The few times I did do freelance consulting work, it was driven purely on people who sought me out and offered to pay me money.

    1. Ann Furthermore

      I came here to say this as well. My husband runs a very small business, and I work for a huge, multi-billion dollar corporation. No, he doesn’t have to put up with all the corporate political BS I do, but I don’t have to worry about drumming up new business and keep the money coming in. He’s great at it, and has been doing it for many years, but that is just not something I am cut out for. The stress of knowing that people are relying on me for their paychecks so they can support their families would probably do me in.

    2. Blue_eyes

      Exactly. I do freelance work through an agency. I love my agency because I have no desire to do what they do. I get to set my own rate, do my work, and get paid on time. They deal with finding clients, billing, and everything else. My job would be much more frustrating if I also had to find new clients and chase down late payments.

      1. Rana

        Absolutely. Doing the work my clients hire me to do? Wonderful stuff. Taxes and keeping records? Tedious, but do-able. Chasing down late payments? Total PITA. Marketing and querying? Something I’m trying to get better at.

        There are a lot of reasons why I freelance, and will continue to freelance, but love of the business side of things is not it.

  25. Faith

    As a fellow consultant, I think it’s pretty common that someone could do that. But… it depends on how you get your business. If it’s personal relationships, you’re pretty safe since those who would join you might now want to function as the rainmaker. If I was looking to come aboard, I might want a way to grow as the business grows. Not necessarily ownership, but perhaps a bonus based on business success. That might influence the person to want to bring in business.

  26. Snuffy

    To me, you have three choices.

    A) Hire someone and tell the kibitzers to mind their own business.

    B) Raise prices gradually until the work volume is where you want it.

    C) Raise prices slightly, then be more selective in the work that you agree to do.

  27. Elizabeth Smith

    I appreciate I’m coming from a very different place – the UK – where that advice is often given, but for vey different reasons. Because it is so difficult to get rid of an underperforming employee, particularly if they come from a protected minority ( the standard has to be kept down, to the point they can end with preferential retention)and because an onerous regulatory regime is applied with equal rigour to a 2 employee firm as it is to a 22,000 employee organisation, a hiring decision is a major risk. Many of those starting up on their own account, particularly if it’s not necessarily from choice, (think those made redundant at 50 who face ageism in the recruitment process) resolve from day one that they will not employ anyone. Ever.

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