I own a small bakery and cake shop that has been steadily growing, and I have added 2 part-time employees.  I am looking for some feedback/advice on whether or not I can (or should) prohibit these employees from freelancing on the side, or "caking at home".  All thoughts are welcome...I am looking to see what is the general consensus on the matter.   

If they freelance on the side, they are essentially your competitors. Do you want them competing with your prices and goods? It would be tempting for me to tell customers "I can do that for cheaper, here's my card, keep it a secret from my boss."

If you don't want them competing with you, you can have them sign a no-compete form (Starbucks does this as do a lot of other businesses).

I owned a bakery & cafe for many years and shudder to think about allowing employees who have a side home-based bakery business, access to my business. It's just too tempting for them to siphon off customers, take ingredients (I'm sad to say that a high percentage of employees will steal), and learn about your business. And non-compete forms sound good, but on a practical level they are useless.

I used to work at a bakery and I made cakes from home as well.  I would have never dreamed of saying to a bakery customer that I could do the cake cheaper.  I liked and respected my boss/bakery owner, I enjoyed making cakes there and I kept my own business separate.  Also - being that I was a cake decorator I didn't have a lot of contact with the customers - someone up front would take the order, I would just check the books and make the cakes.

OP - where did you learn how to bake and decorate cakes?  All completely on your own?  You never had anyone share information with you?  I have worked at lots of places and I have learned lots on the job(s).  Some of which I now apply to my own business.

I used to work at a bakery and I made cakes from home as well.  I would have never dreamed of saying to a bakery customer that I could do the cake cheaper.  I liked and respected my boss/bakery owner, I enjoyed making cakes there and I kept my own business separate.  Also - being that I was a cake decorator I didn't have a lot of contact with the customers - someone up front would take the order, I would just check the books and make the cakes.

Exactly, slice, fill, stack, and ice to order, that was my job. What I did outside of my job is my business.

My old boss knew that most of the cake decorators did their own thing and that they would never do anything like that out of respect.

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And the last thing you said that I highlighted - it's not wise to train any more competitors than you have to. And when your employees actively have a business of their own, then you know you're training competitors. That is not good business. Ideally your employees are people who would never want to compete with you.

Wow........SMH

AThis really reminded me of this thread: http://cakecentral.com/t/769925/for-those-who-own-a-bakery-and-have-employees It was started by someone on the opposite side of a similar situation. (Not saying that all things are the same, just similar enough that I thought it might be worth looking at.)

AMarie, so now you know that three people in the world would have integrity and not steal or try to take business away from you. But no one is explaining how to know who will and who won't. And it's not like liars and cheats will come on here telling you how they specifically hired on somewhere to steal recipes and techniques or admitting that they stole supplies. I imagine everyone who posts will say they'd never do such a thing, so the posts won't balance out.

It seems to me that even if 100 people post to say how they'd never do their employer wrong, that just doesn't change the fact that to hire known competitors isn't a very good business practice. It also sounds to me like, so far, the people defending the idea have been the employee in a situation like this, but not the employer. Not sure. But I bet you would learn more if you could speak with the people who employed them about how glad they are that they did this.

I don't know, where I live things are different. Case in point, one owner at a high end bakery got her arm caught in a mixer. It was terrible, at the same time the head cake decorator was already in the hospital. So another bakery who just knew the owner from events and venues sent over two of her girls to help her out until things were under control.

I don't know if it's because it's a small city and everybody knows everybody, it's almost like friendly competition. An easy way to get fired at any job here is to bad mouth your old boss on social media or at your new job. It's a very tightly knit community.

So what if I was the employee, you're not the employer either. Well OP, all I can tell you is not hire cake decorators with side businesses and do extensive background checks on all your employees and keep your recipes and supplies locked up at all times. If theft, stealing recipes, ideas or direct competition are even the reason that you started this thread.

AAs part time employees, I would never sign a no compete form, NEVER. Maybe as full time.. But part time? C'mon! I know people with 3 jobs to support their families, they make desserts and cakes in several places. You must offer an amazing rate to expect that..

AAnyways, if you are afraid they can steal your customers, keep them away from them! You need to be the one talking to customers, giving prices and taking orders!

AMarie, I don't live in a close knit community - I live in a large city where anyone screwing the hell out of me can just go off on her happy way without anyone ever knowing, caring or thinking badly about her. But really, even in a tight knit community if any competitor is selling the similar nice cake for less than you, aren't people going to vote with their wallets when it comes down to it? Maybe you can shut them down if they aren't following the requirements of your state's cottage food law, but whether or not you should in such a small town is another story. Especially since once they do get certified, they may delight in undercutting you. I wouldn't want to be in your shoes and have to deal with these issues.

I am an employer and when anyone wanting to work for me says they also have their own cake business, I don't even hesitate for a second before passing. It amazes me how egocentric people can be when asking for a job - I get a lot of "I have a passion for making cakes and have been selling them from home for a while, but I think I could really learn a lot if I could come work for you". They can't even put themselves in my position long enough to realize how that's going to sound to me.

So intentionally hiring a competitor to work for me is not something I will ever be able to comment on from experience. I'm not saying there aren't situations where it can work- just saying it's generally bad business and I wouldn't do it.

It is very frustrating to have competitors right there with you, kind of like having a fox guard the hen house.

I agree that it would be very difficult to uphold a no compete clause and I am not sure how I would handle this except to pass them as an employee.

I taught Wilton classes for many years and when I moved back to Florida I ended up at a deli doing so again.  I did not realize they made cakes on the side and they questioned me about many things, which I answered.  I found them watching my classes and then they took them, of course they told me they sold cakes.  They started doing fondant cut outs and putting them together as the cake's decoration but......then sold them for an 1/4 sheet, one layer only.  They were under cutting everyone.

Sorry I can't say what can be done except being wise on who is hired and guarding your supplies as well as your recipes. Good Luck!!!!

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Year before last, for spring and summer I hired a part time employee who was helping me decorate. She couldn't fondant a cake and I had thought she'd learn faster than she did and it didn't work out very well. The next year I hired someone for the busy season to clean and do other simple tasks two days a week. I considered hiring someone this spring, but I'm keeping the number of orders down instead and so far I'm making more money than I would with the extra help. I haven't fully decided which way to take this business and I need to do that before taking on full time, non seasonal workers.

I previously owned a RE/MAX office and certainly had employees in that business. So I definitely think of myself as an employer, although admittedly I have no employees at the moment. Unless you count my delivery driver.

Enga, you seem to have such a problem with me not just on this, but on other threads. I don't know what it is that bothers you so much, but one thing I know about is running a business and when I share business information it just never seems to sit well with you.

Thank you for all of the feedback, from both sides.  I apologize for being absent from the conversation for a while, but I was enjoying Easter Dinner with family. 

From the replies it does seem as if there are certainly two separate schools of thought on the issue - as I should have expected - differing mostly based on the position you hold as either an owner/employer or as an employee. 

I will attempt to make some clarification and answer some of the questions that have been posed, but I am not going to defend every point that has been made regarding why I am posting the question.

As I said, I own a very small cake shop - so there is a lot of multi-tasking that is involved.  My employees help with the decorating, they wash dishes, they make frosting, they serve customers, and although I am the main contact person for orders and for pricing, my employees do come in contact with potential customers and take orders.  This cannot be eliminated - it's part of the reason why I have employees.  They do have the opportunity to "steal" my customers.  Do I think that they have or will?  The point is - I don't know.  My employees are not "trained" decorators - they are helpers.  I am basically training them myself so that I can rely on them more extensively.  I am willing to invest in these young ladies because they are enthusiastic, trainable, and reliable.  They are both young ladies, who live at home and are also part-time students - they are not supporting a family, neither do they need this job, or any freelance work, to make ends meet. 

When I hired the second person I did not realize she was making cakes from her home for customers, it has only recently come to my attention.  As for the other employee, I am unsure if she is freelancing, but I would not ask one employee to sign a non-compete clause without asking the other. 

Thanks again for all the comments and feedback - I do like seeing it from all sides. 

I don't have a problem with you howsweet. I feel that you have a problem with me. 

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