Have you recently ended a contract with your business partner? Has an employee resigned or ended their contract? And does your company ahs any non-compete agreements with employees?

There are risks like unwarranted competition or disclosing the company’s information associated with such scenarios. Therefore, it is advisable to avoid trouble with a non-compete agreement in such circumstances.

What is a Non-Compete Agreement?

A non-compete agreement is a legal term used to describe an agreement between two parties, mostly a former partner or former employee and employer.

This agreement primarily prevents a former partner or employee from starting a similar profession in competition against their former employer or partner. 

Benefits of a Non-Compete Agreement for your Business

Below are some ‌benefits of non-compete agreements to your business.

1. It conserves critical information about your business

When individuals leave your company, they do not leave behind their experiences, knowledge, or talents learned when they worked for you.

A non-compete agreement ensures the information about your company, products and services are not divulged, should the employee work for your competitor.

2. It enables you to know when a former employee shares your company secrets

Additionally, the worst thing for a business is to train a person and spend their resources nurturing an employee only to resign and take their talents and company secrets to your business rival. 

Non-compete covenants will enable you to know if your former employee uses the skills and secrets of your company at their new boss’s business.

If you suspect a breach of the non-compete agreement, it is advisable to involve your lawyer.

3. It prevents unfair competition among business owners

If you are buying a business, you may face the risk of unfair competition. This occurs when the previous owner sells you a business, turns around, and reopens a competing company in your vicinity. 

This unprofessionalism develops unfair competition since the original owner has access to your customers.

A non-compete agreement prevents the original business owner from soliciting your customers and opening rival business.

4. It helps retain good employees

Most companies spend a significant amount of resources training their employees to achieve a higher success rate. 

Unfortunately, this is a risk such companies have to take to ensure their customers are satisfied with their services or products.

The non-compete agreement helps to keep such polished talents and skillsets. In addition, most employees under this agreement are likely to work for a more extended time in your company. 

5. It protects against employees who see your business as a means to an end.

Along with this, non-compete agreements protect against employees who see your business as a means to an end. Such employees may not offer their service to their best level, reducing your business’s quality service delivery or profits. 

6. It Improves and protects your relationship with your clients

Clients in every business want to feel safe and satisfied once they are in or out of your business. When an agreement binds your employees, clients feel more comfortable knowing their information is secure with your company. This trust enhances your relationship with your clients.

7. Inference

A non-compete is an agreement that protects your business from unwanted competition. Among its benefits are;

  • Conservation of business-critical information
  • It improves your relationship with your clients
  • It helps to keep excellent employees
  • Prevention of unfair competition

Also Read: What Small Businesses Need To Know Before Making Business Partnership

Final Thought

We have discussed in this article what is non-compete agreement and how it can be of great benefit to your business. So, your business will be in a safe position with a non-compete agreement with your employee.

And you do not need to worry about former employees sharing your business secrets with competitors.