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On a practical level, if I sell my small business, is a non-compete really something that's practical? If all I know is furniture sales and all my contacts are

On a practical level, if I sell my small business, is a non-compete really something that's practical? If all I know is furniture sales and all my contacts are in the furniture business, etc what am I supposed to do now, assuming the sale didn't make me incredibly wealthy to the point where I dont need to work ever again? Its unrealistic to expect people to suddenly learn new skillsets later in life, especially if they have decades invested into these skillsets. I think this is why non-competes in many industries are ultimately unenforceable and why the courts or state legislatures never want to make non-competes powerful. People aren't machines. They can't really be retooled. If I get a job with Bigco and then switch to Smallco, Bigco shouldnt be able to tell me I can't be a programmer there. Corporations shouldn't have this level of power over us. Even if we dismiss the first scenario as a 'business sale' I'd argue that sole proprietor businesses or any business with only a few people is much closer to being an employee somewhere. You can't expect someone to give up their only skills for 5 to 10 years for a modest sale. Not every sale is a SV-like billion dollar plus sale.

jasode 10y ago
>, if I sell my small business, is a non-compete really something that's practical? Yes, it's practical. If the non-compete is explicit and part of the conditions for the sale, the owner-seller is supposed to factor that into her selling price. E.g. if the owner has a mental price of $2 million to sell the furniture business but is unhappy about not being able to open another store, she needs to raise her price to $3 million to be content with not competing. In other words, the buyer of the business is partially paying the previous owner to not compete -- for a limited time such as 5 years. Maybe you're thinking of employees and their unenforceable non-compete clauses trying to prevent them working for competitors in California. That doesn't apply to the owners selling their businesses.
Spooky23 10y ago
Usually a non-compete like that is geographically boxed. When you're selling a business, you're selling the future. If you sell your furniture business, then turn around and open up a store down the road, you're attacking the ROI that you projected going forward and the buyer acted upon in good faith. Sketchy. Employees are a different matter, as it's a one-sided arrangement where the employee has little bargaining power. Small businesses are different -- both parties are free agents.
- drzaiusapelord 10y ago
  My thinking is that I sell my furniture store but then get a job at a different furniture store. I don't necessarily see that as an attack on their ROI. But yes, starting a new company nearby I could see being blocked for x amount of time. The problem I see is that NDA's aren't that granular. They're fairly strict and can hurt one's ability to find work.

jasode 10y ago

>, if I sell my small business, is a non-compete really something that's practical? Yes, it's practical. If the non-compete is explicit and part of the conditions for the sale, the owner-seller is supposed to factor that into her selling price. E.g. if the owner has a mental price of $2 million to sell the furniture business but is unhappy about not being able to open another store, she needs to raise her price to $3 million to be content with not competing. In other words, the buyer of the business is partially paying the previous owner to not compete -- for a limited time such as 5 years. Maybe you're thinking of employees and their unenforceable non-compete clauses trying to prevent them working for competitors in California. That doesn't apply to the owners selling their businesses.

Spooky23 10y ago

Usually a non-compete like that is geographically boxed. When you're selling a business, you're selling the future. If you sell your furniture business, then turn around and open up a store down the road, you're attacking the ROI that you projected going forward and the buyer acted upon in good faith. Sketchy. Employees are a different matter, as it's a one-sided arrangement where the employee has little bargaining power. Small businesses are different -- both parties are free agents.

drzaiusapelord 10y ago
My thinking is that I sell my furniture store but then get a job at a different furniture store. I don't necessarily see that as an attack on their ROI. But yes, starting a new company nearby I could see being blocked for x amount of time. The problem I see is that NDA's aren't that granular. They're fairly strict and can hurt one's ability to find work.