Ethics in Business mentor Jeffrey L. Seglin responds to the following question from an inc.com reader:
I work for a company that is not interested in selling to aparticular niche. I would like to start my own company directed at thisniche. I know that some of my current customers would followme, so there would be some "overlap" with customers.
I signed a noncompete agreement with the company I currently work for.I've been told that it won't hold up in this state, but I don't wish tofind myself embroiled in a lawsuit either.
Ethically and legally, where do I stand?
Jeffrey L. Seglin responds: From a legal standpoint, that depends. State law varies considerably, so where you live affects the enforceability of the noncompete agreement. (You may want to read Inc. magazine's 1997 article onnoncompetes.) You should certainly consult a knowledgeable lawyer about the current law in yourstate.
From an ethical standpoint, if I'm reading your question correctly, itsounds as though your new business will not be going directly after the samemarket niche as your current employer. If that's the case, and theoverlap customers come to you on their own after you've set up, then it doesn't appear to me that you've crossed the line.
Nevertheless, since you know all thedetails, you should examine your motives for going after customersin this market niche, both in terms of the noncompete andhow you'd feel if an employee did this after working with you. If you'redeliberately setting up shop to lure away your current employer's customers, then you're probably violating your noncompete, in spirit at least. Whether or not that puts you in legal trouble, it's not great ethical ground onwhich to start a company.
If, on the other hand, you're setting up shop to offer services orproducts to a niche that isn't being served, and your current employer has nointerest in serving it, then have a go at it. If you've determined that there's enoughmarket demand in this underserved niche, then chances are good that you're making awise business decision.
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