Tuesday, October 15, 2013

Starting Your Business with a Clean Slate

Breaking up is hard to do. That's true for relationships and also for ending your contract with an employer.

Whether you're moving on to start your own business or have been hired at a company that could be considered a competitor, you'll want to make sure you can start your new job with a clean slate.

A lot of the following issues might be covered in your employee contract. It's worth discussing with an experienced lawyer to make sure you can get up and running without a potential lawsuit slowing you down. 

Here's what to look out for:

Intellectual Property

It is obvious that anything you created or invented during work hours for your company is owned by that company. This would be considered intellectual property. Where it gets fuzzy is any work you did on the side during off hours. Things could be further complicated if you used any type of company equipment like a computer or software for your own inventions. There could be a strong claim for that property you created.


It stands to reason that if you're good at your current job, then your start-up would be related to your skill set. That might be cause for concern if you are going to be in direct competition with your current employer. Most contracts have a non-compete clause that can last up to a year. It might take that long to line up your investors and launch your business but you'll you might be restricted from doing any kind of work that is deemed "the competition." Worst-case scenario, you sit out the year and spend it planning.


This is often referred to as the "poaching clause." Just because you've created solid working relationships with a lot of clients doesn't mean you can "steal" them all for your new business. It's a tricky area. A client can go to any business they want as long as they don't violate a contract. The mere fact that you're starting up on your own might be enough incentive for the client to jump ship. From a legal standpoint you'll be covered if you don't actively solicit that client.

If you have doubts about any of these areas then you'll be better off checking with a lawyer. Additionally, you should consider your future plans when accepting any job. If your goal is to become your own boss then a restrictive employee contract which prevents that from happening might not be worth signing.

There is nothing wrong with negotiating. Just make sure you're not getting trapped into a contract which will stop you from pursuing your dreams.