Recently, we have heard a number of nightmare stories from members who have had business stolen away by contractors they considered to be friends. We thought it might be helpful to highlight the challenges involved with hiring friends and some potential steps you can take to prevent a similar situation from happening to you.
In most of the situations we’ve seen, the contractor in question started out as just that, a contractor.
BUT AS WE ALL KNOW, AFTER YOU HAVE WORKED TOGETHER WITH SOMEONE FOR ANY SIGNIFICANT LENGTH OF TIME, IT IS ONLY NORMAL THAT A FRIENDSHIP DEVELOPS.
The mistake many people make, though, is assuming that that friendship will somehow protect you from being taken advantage of, and this is just not true. In these cases, contractors (some of whom had worked for the member for more than 10 years!!) went behind the business owner’s back and stole the clients they were working on.
The best way to insulate yourself from this risk is to have your legal ducks in a row from day one. Each contractor should sign a non-compete/non-solicit agreement that includes financial ramifications if they break the agreement. And, on the flip side, your contracts with your clients need to have similar language that clearly lays out what they will pay you should they decide to hire the contractor directly, regardless of whether they hire them as an employee or continue the contractor relationship.
It doesn’t matter if the contractor is your best friend from kindergarten, the Maid of Honor at your wedding, or your child’s godmother. EVERYONE needs to sign the agreement.
If you find yourself in a situation like this, it often helps to try to figure out how much the lost business is going to cost you before figuring out what to do next. In one member’s case, she realized that even though the contractor stole 10 clients from her, the actual dollar value of that work was $4,000. Certainly an annoying amount, but not enough to sink the ship. In this case, she realized it was a better use of her time and money to part ways cleanly, chalk it up to a lesson learned, and move on with getting her legal protections in place. In another member’s case, the price of the work that walked out the door was closer to $40,000. In that case, it would certainly be worth her time and effort to have a serious conversation with the client about what had happened and try to come to some financial settlement.
The best news of all is that you can avoid this entirely by making sure you have solid legal agreements on both the contractor and client sides. Remember: you are a business owner first. Don’t let friendships get in the way of you protecting your business.