The dos and don’ts of working for a rival before starting up

If you’re launching a startup in the same industry that you already work in, your startup will be a competitor of sorts to your former employer – a tricky situation, but one that’s all-too-common. However, at the same time, the experience that you’ll have gained in the industry (and potentially the contacts) can be invaluable. To avoid getting into legal hot water whilst still making the most of everything you’ve learnt, here are the dos and don’ts of working for a rival before starting up.


Learn about the industry

The most valuable thing you’ll have learnt when working for a future rival is better knowledge of your shared industry. Depending on the time you’ve worked there, you should have a firm grasp on what the industry is about, what it needs, and how you can contribute to it – an in-depth knowledge that just researching from the outside can’t come close to matching.

“Working for a rival is also a great way to build credibility – especially if you worked at a big brand in your space,” adds Virgin StartUp loan panel member Andrew Hutchinson. “It can really help when you’re pitching new clients, for example.”

See how you can do things differently

What’s the point in leaving a job just to take the exact same approach in your own business? Working for a rival should show you where there’s room to take a different approach and fill in the gaps that other companies aren’t – it should get you fire up with the possibilities of doing things differently. As an added bonus, you’re less likely to step on your former employers’ toes.

Make good contacts

Working for a rival is a great opportunity to build a network of relevant contacts in your industry’s space. When the time does come to leave be open with the colleagues you want to stay in touch with, and think about the long-term rather than the short – you never know when a solid contact could come in useful, even if it’s years down the line. Which brings us to the next point…

Be honest

Whatever you do, be honest and respectful of your employer. They’ve taught you a lot – maybe everything! – and keeping in their good books if you can is a priority. They may be understandably upset by your decision, especially if your businesses will be direct competitors, but do what you can to keep things friendly, whether that’s ensuring them that you’re aiming at a different target market or confirming that you’ll honour any non-competes in place. As with leaving any job, be tactful with your reasons for leaving too – emphasise that starting up on your own is a great opportunity, and thank your employer for how they’ve helped shape you and your skills.

“If you admit that you’re starting a competitive company, you might even get paid gardening leave – which you can use to work on your startup,” adds business advisor Jonathan Spanos.


Take customers with you

Telling customers before you leave your job that you’re quitting to start a rival business, and asking if they’d like to join you, is a tricky one. It may be in your contract that you can’t do that anyway (more on that later), and it’s not necessarily the best foot to start off on.

However loan panel member  Nick Coates has an alternative view. “If the person starting the business is the one with the relationships and contacts, and they're going to be providing something better, I don’t see the problem with taking customers with you,” he explains. “Non-compete clauses do exist in contracts but they are very hard to enforce, and if a client or customer wants to leave you to go with your employee the enforcement will only mean they can’t work with the employee, they will probably still leave, and it will make the employer look bad - using the courts to retain customers instead of providing a service the customers want.”

Poach colleagues

Keep in touch with colleagues, bounce ideas off them and keep your channels of communication open – but think carefully about encourage them to jump on board.  You might know a superstar colleague who’d be perfect for your business, but is it worth irrevocably damaging the relationship with your former employer? Who knows what could happen in the future, but in the immediate months give it some time and look elsewhere when hiring.

Get into legal hot water

Make sure you review your contract and any non-competes and other clauses it contains. This might not be limited to taking customer or client details with you – you also shouldn’t take data or company information with you, whether that’s email marketing lists, copies of software, confidential documents, training materials… basically, if it feels like you shouldn’t be taking or using it, you probably shouldn’t. The same goes for using company accounts after you’ve left, such as Google Analytics – this gives you an unfair advantage into their processes. Even if legally you’re technically okay, getting ahead by underhanded means is never cool, so play it clean.

Burn bridges

It can be difficult in such an emotive situation to remain calm, but remaining on good terms with your employer can make the transition much easier and hopefully avoid some sort of rival business feud taking hold, a toxic situation for both you and your employer. Don’t feel tempted to burn bridges and make them your enemy. Even rival businesses can work together harmoniously with effort.


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