Other than the inability to fire without cause (which isn't an issue in the US), I agree with CakeChemistry, actually.

Firstly, seriously, recipes are everywhere. "Your" recipe is usually one that you found somewhere and tinkered with until it worked right for you. Chances are the recipes you made she'll be doing the same with. We all like to put our own twists on things, and if we don't... Well, it's unlikely we're going to be successful bakers because we lack creativity.

If you hired her, she kicked butt for you, and you like her and what she's done, foster that relationship. Teach her things, learn from her. Talk about expanding the business together. If she decides to go out on her own, maybe not invest monetarily in her business, but it won't hurt you to be a mentor. If you keep that relationship it will be about working together and NOT about competition.

Above all, talk! Don't assume. Discuss. Is she really going off on her own with the intention to directly compete? Has she really taken your recipes? Has she given you any reason to distrust her in the past? Ask her what her plans are and if she is going off on her own to compete, why? That'll give you a better idea of whether you should fire her, work with her or something entirely different.

A well trained, ambitious, creative, and talented employee is something you want to keep. They will only improve your business. On the other hand, one who is not trustworthy is one you want to drop quickly. Either way, if she IS going to start her own business, keep things civil and friendly, and you won't have to fear more than friendly competition. If you go the mentor route, you likely won't even have to fear that. I live in the sticks, and there are definitely ways that you can work together or serve different markets, even in a small area.

A

In a small town with a limited market I'm not sure it's a safe bet to count on deferring to a mentor trumping the success of one's own business.

There's nothing wrong with being civil to competitors, keeping an open dialogue, and referring overflow orders when necessary, but mentoring a business owner who is directly competing with you and investing in their company may not be the best ideas. If you want to work closely with a direct competitor, a better path may involve merging the two companies (or in the case of a potential direct competitor, offering a path to partnership).

When we're talking about the daily reality of owning and running a small retail baking business, Liz and I have had first hand knowledge. I hope the OP is able to sift through all the comments. And I hope the lurkers can do this, too.

AI have first hand knowledge as well, and I can tell you that to fire people jUst because you feel threatened by them isn't wise financially.

Everyone on CC is entitled to an opinion. In my opinion, I hope the OP is able to sift through all the comments. And I hope the lurkers can do this, too.

A

I agree. And my opinion is that it's foolish to fire someone because you feel threatened. I have experience with this exact situation, and I can tell you that it would be a big mistake.

I'm not arguing with you, Brandisbaked. So I think you should respond once more to have the final word.

A

I wasn't arguing with you, nor was I being rude - as you were with your last comment.

I guess we can leave it here if you like. :-)

A

We're cool, no worries. ;-)

Tighten up your business by doing the pre-mixes as suggested and securing client information. 

Second, as Jason suggested, establish succession and promotion plans.  Your bench should be two deep.

Third, ask her, flat out.  If she is, she'll either tell you or know that you are aware. If she isn't, great.  Either way, you can discuss succession planning and how she can move up with more pay and responsibility.

It sounds like you are entering a new phase of business ownership.  Managing associates is difficult.  Just when you think things are OK, something happens with an employee.  It is rarely about money, believe it or not.  It is about being appreciated.  Money is just part of the way you show that as a business owner.

In short, how are you appreciating/compensating your employees.  As the business has grown, has compensation grown? 

Whether this one works out or not, think about it.

I would like to generally comment on three themes that have come up in this thread.

First regarding firing.  When you first start your business, you really don't want to have to fire anyone.  You are afraid of the repercussions, you are uncomfortable with the confrontation, who will you find to replace the person?  The list goes on and on.

But when you have worked in the kitchen (or out front) with someone who is sloppy, dysfunctional, doesn't care, is a thief - just fill in the blank with your own problem - it wears on you.  It makes you miserable.  Once you get up the courage and just fire this person, a weight is lifted off of your shoulders.  You wonder how much nicer your business would have been to work in if you had done it earlier, instead of continuing to be miserable day in and day out.  And regarding unemployment claims, if you have documented your issues, given verbal and written warnings, you will be fine.  We pay the base rate for our state unemployment plan, which is currently 1.1%.  We have fired 3 employees over the 3 years we have been in business (we have 15-16 employees total).  Two in the kitchen, and one out front.  The last employee was fired after 2.5 weeks - he couldn't get the hang of it, was disrespectful, and creeped out the other employees.   Our unemployment rate has remained stable.

Second regarding recipes.  If every recipe that ever existed turned out great baked goods, the posters who don't think it is a big deal to share a recipe would be correct.  But 9 out of 10 recipes turn out sub-par to average products.  Those of you who have tweaked recipes to find the exact outcome you desire understand the work involved.  So it is a big deal to me that the OP keeps her recipes her business.

And finally, about competition.  I'm amazed at the utopia many of you live in where we are besties with our competitors, and train up our employees and send them out into the world to take away our business . . .  Where I live I have to work hard to keep all the business I have, as well as gain new business - who has time to run an appreticeship program when you are making money to keep the lights on?  And the OP doesn't have an intern, as was mentioned above - she has an employee.  And for those of you who don't know how internships work, usually they learn just enough from each area of the kitchen to make them dangerous, and then they are out the door. :)

Liz

^ very thought provoking post! It does make me change my mind.

Excellent response, Liz. 

AYou've gotten really good advice. I just wanted to comment from the other side.

I have my own business now & I used to work in a bakery. Of course she's a store front and I'm not, and she's also about an hour away from me.

What I really want to say is this. The workers who did not want to have their own business one day and were content with making an hourly wage forever were not the most productive. Its been my experience that those who one day want to own their own business are the best workers, and they will move on. You don't want to make it a habit to start hiring people who have no ambition or desire to do more. That's mediocrity and I don't think you want that on your team.

As some other ppl said the paper work and the shifting of the business to the decorating side will really help with keeping you more protected

A

I absolutely agree with you on this and the other two themes you brought up. Hopefully once OP finds out more information about what is going on she won't hesitate in firing this person as long as it is warranted. Based on what she has shared so far though it would be jumping the gun (unless there is more she didn't tell us).

Well said, Liz.