A common question asked of our business plan writers is whether we will sign or whether we will supply a nondisclosure agreement (NDA). The answer to these questions is always yes. However, these actions beg the question: Is this an exercise in futility? In the short blog article, our business plan writers explore NDAs, their benefits and whether you really, truly, need one.
What is an NDA?
A nondisclosure agreement (NDA) is an agreement between two individuals or two companies that simply outlines parameters regarding privacy of information discussed and ramifications for its violation. In other words, a nondisclosure agreement simply states that both parties agree not going to blab about the other parties’ practices, ideas and business structures. If they do, the not only shame on the blabbing party but also, they might be in some hot water, legally.
How does an NDA benefit me?
An NDA benefits the business owner because this offer some protection that the business plan writer, or signer of the NDA, will not take their client’s idea and start a business using the same concept. From this protection, business owners are often than able to speak freely about their business and get professional assistance to streamline and optimize various business models or concepts. As a result, by using an NDA, business owners are able to move forward with their business concepts with little fear of outside exploitation.
How can you enforce an NDA?
Of course, just because somebody signs an NDA, is not mean the business owner in their ideas are fully protected. There are numerous reasons for this. A main reason is that proving the person that signed the NDA was the party responsible for leaking the idea is incredibly difficult to do. Further, it is also incredibly expensive to enforce the NDA. Because of these challenges, signing and implementing an NDA is almost futile.
So, do you really, really need an NDA?
So, this leads to the question, do you really, truly need an NDA? From our business plan writer’s experience and thought process, the answer is yes, but it really depends. An NDA may keep some honest people from leaking your information. However, unscrupulous business entrepreneurs will exploit opportunities, regardless of legality. In these situations, no NDA in the world, based on our business plan writers’ opinions, will keep this from happening. From this, as a business owner, any action that may lower the risk of your business ideas becoming public before you are ready is worth the activity. So find a good NDA template online and include it in all of your business plans.
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Author: Paul Borosky, Doctoral Candidate, MBA.