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One of my coworkers and I have decided that we'd like to go part ways with our current employer and start up our own business.

Currently we are in a small IT company with their software development department. Without us the department will collapse and the main company will not be able to quickly recover from the loss (we are department managers and rulers).

We don't want the main company to suffer, so we plan to continue to work for them, but on a contract basis.

Basically we'd like to change our employment contracts into a business contract and be able to take on our own customers, and hire our own people.

We are afraid that once we lay out the situation to the boss, he may become resentful and accuse us of a conspiracy.

What do you think would be the best way to put it, so it does not look like a betrayal?

p.s. have to hide behind a new account for reasons above.

Update: seems like a many people are concerned with legal side of things. We have a lawyer and she is overlooking the process, making sure we don't do anything stupid. We certainly are not planning to steal customers from our old company, unless they agree to give them to us.

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You probably already know this, but you should consult with a lawyer before taking action. There are some states that provide some protections to employers from this sort of talent siphoning. A small investment in prevention now might save you a pile of money in legal fees later. –  ReallyTiredOfThisGame Jul 2 at 14:59
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In what country (and if US, what state) are you located? –  Ollie Jones Jul 2 at 16:01
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@Busy_Hamster, check with your solicitor about non-complete contracts. Draconian contract provisions are often completely and notoriously unenforceable. –  Ollie Jones Jul 2 at 16:38
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@Doc, slavery and indentured servitude were outlawed in the US in 1863. But some employers still try to make you think you're obligated. –  Ollie Jones Jul 2 at 16:40
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I'm unclear as to why or for what possible reason you'd "present" this idea to your boss. I mean, you're quitting. This isn't a mutual decision that needs to be run by the boss... so is there a particular reason you don't just give notice? "Hey boss, we're quitting to form our own company. So long, and thanks for all the fish... but if you want us to do contract work for you while you transition and get some replacements in, we're open to it. Let us know, and best of luck in the future, blahblahblah." –  HopelessN00b Jul 2 at 23:40

3 Answers 3

Personally, I would just give notice just like you would ordinarily do. Tell him that you are forming your own company if you wish. Let him float the idea of providing some support until he can get a new staff up to you instead of proosing it. It really isn't up to you to ensure that the prior employer's work gets done any time you leave. It is theirs.

If you are counting on this business to help launch your new company, I would rethink that idea.

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we do hope to get some funding from work done for the old company. But that is not crucial. Thank you for you answer. I'd upvote, but not enough reps yet. –  Busy_Hamster Jul 2 at 14:35

This is tricky... The biggest issue I see is this... and be able to take our customers in many ways this IS stealing from the company and likely against company policy you agreed to when you started.

Best I can recommend is put in your notice period, but perhaps offer to extend it on a contract basis to cover their needs.

The big thing though is what you do for your old company for vs your new one needs to not qualify as a conflict of interest (Which from the sounds of it, it does) and you can't snipe / steal clients unless your old company offers to hand them off to you. (What you might consider is offer to give them a "finders fee" to effectively buy the clients, essentially any clients they provide your business you offer them a cut of the profit)

All in all I'd put in my notice, and THEN negotiate. But be very careful to not land in a conflict of interest situation. In many places that could potentially open you up to legal consequences.

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Regarding stealing their customers - we can't. We are bound by employment contract where it says we can't interfere with customers. We've checked with lawyers and we better not break that term. –  Busy_Hamster Jul 2 at 14:32
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Correction: "our customers" - I mean find customers that are not related to customers of old company. No intentions of stealing old company's customers. –  Busy_Hamster Jul 2 at 14:37
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Okay, good to hear you've pursued proper legal consult on this matter. Some things that seem very safe in real world terms are legally not okay... and visa versa. –  RualStorge Jul 2 at 17:27

It's best to be clear about what you're doing before you announce it.

  1. You're taking some key people from the current company.
  2. You're asking for your startup to be partly financed by contract work from the current company.

It's possible you're planning to compete with your current company; you didn't mention that.

Presumably you've decided with good reasoning not to try to take this boss with you to the new company.

You're right that your boss may not be pleased with this plan.

I've done this. Some colleagues and I walked away from hardware company "p" to start software company "v". The intention was to create software to compete with their hardware. It was vitally necessary to walk away, because the hardware company's infrastructure and power structure made it exceedingly hard to sell software in place of their hardware.

So we made our plans, worked out our pitch to our old bosses, and announced our departure in a disciplined fashion. We served out our notice periods (as were were requested to do) and left. The part about consulting didn't work out due to circumstances at the time.

We had a straightforward and well-rehearsed elevator pitch (15-word mission statement) for the new company, which we gave to everyone including our old boss. The key was presenting the whole deal as already settled. We were very careful to avoid saying anything that sounded like "if you don't let us do this project, we will quit and do it on our own."

Our employee agreements with our new company explicitly forbade us from using any of the old company's intellectual property, including technology as well as lists of customers and distributors. We stuck to that.

It also forbade us from recruiting people from the old company. A couple of colleagues resigned, then asked us for jobs. When the old company came after us, we agreed with them to avoid hiring anybody else.

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would you say you succeeded in starting up on your own? –  Busy_Hamster Jul 2 at 16:27
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Yes, thank you very much! It was quite successful. –  Ollie Jones Jul 2 at 16:30
    
Love that! Success stories in similar situation are very nice to hear! –  Busy_Hamster Jul 2 at 16:31
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All the best to you, @Busy_Hamster! Be strong, and don't let your crunch times run more that two weeks at a stretch. –  Ollie Jones Jul 2 at 16:42

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