Updated: September 28, 2022
Question: What if you work within a certain business and decided that you want to start a similar kind of business while working there. Do you think it would cause a conflict?
BUSINESSWISE: Here’s my question to you: do you believe that the company would have hired you for the position you hold now if you had declared your intention to start a similar business that could possibly compete with theirs in the future? If the honest answer is no, then you already know this situation will be problematic.
In most industries, starting a business similar to that of your employer during their employ is most certainly a conflict of interest and is likely to cause tremendous fallout, including termination of employment and even litigation.
In some professions, usually those that are strictly regulated in most jurisdictions – such as medicine, law and real estate – it is mandatory to work with qualified, licensed and experienced practitioners in the same field in which you plan to practise as a part of the training and certification process.
In such instances, the issue of conflict usually does not arise.
A conflict of interest, by definition, is a situation in which a person is unlikely to make a fair decision in given circumstances or impartially execute his duties because of competing interests. In your case, your private interest to launch a similar company will call into question your ability to carry out your duties in the best interest of the company, your suitability to be exposed to sensitive company information, or inside information generally, and your moral principles.
You are likely to enjoy an unfair advantage in learning about the strategy, operations, business model, and even weaknesses of your employer.
Your employer would be unfairly disadvantaged, working and sharing with an employee as a trusted hired insider who, unknown to them, will soon replicate their business, possibly copy their best business practices and systems, which took years and substantial investment to build, and potentially compete in the same marketplace for the same
It is for this reason that you should expect tensions even if you start the business after resigning from your job.
As a general rule of doing business, or operating in any professional space, it is imperative that you not only recognise conflicts of interest, but declare them when they arise and even recuse yourself from the position.
Particularly in this digital age when information travels so quickly and is so widely and easily available, entrepreneurs must be mindful of their reputation and guard it jealously at all cost. Your reputation becomes your personal brand, and in a relatively small local business community, the slightest hint of impropriety or shadiness can close crucial doors to potential partnerships, networks, and contracts and stymie your growth potential.
Another issue for you to contend with is whether you will open the door to unnecessary legal battles. If you signed a non-compete or special disclosure agreement, or if such clauses were included in your terms of employment, then you could find yourself locked in costly legal wrangling for breach of contract. Even if the case is decided in your favour, the reality is that there are no real winners in most litigation matters because it is expensive, time consuming, distracting, highly adversarial, and emotionally taxing.
Finally, there’s the issue of creating bad blood with your previous employers. While it is difficult to avoid making enemies in business, you should try not to, particularly in cases where they may feel cheated by your actions.
People who believe they have suffered injustice typically carry those grievances for years and may seek retribution where and when you least expect it. As best as possible, even in the most competitive of industries, act with fairness and maintain harmonious relations with others.
In short, if are launching a business similar to your employer’s, then you have an ethical duty to disclose it while working for their company. Another option would be to resign and launch your business thereafter.
I wish you good luck and good karma.
n Yaneek Page is an entrepreneur and trainer, and creator/
executive producer of The Innovators TV series. Email: email@example.com Twitter: @yaneekpage