When employees become the competition

By Mikal E. Belicove

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 you
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.

Use a non-compete agreement
You could ask new hires to sign a non-compete agreement, and if your state enforces such agreements, you can make signing one a non-negotiable 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 must hire the right people—people ready to work, not 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 work for you with more responsibility and money, you may hand 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 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. Use the information to differentiate your business and do a better job.

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This story appeared in the July 2012 issue of Entrepreneur.