It happens to almost every aspiring entrepreneur. You have been in a situation where you had the opportunity to pitch your business idea of a new product/service to prospective vendors, investors, employees and maybe a partner or at least a mentor.
With so many competing ideas in the marketplace, it’s very difficult to prove that yours is first or the only one of its kind. It’s your unique voice and execution that will distinguish it. This is a problem because, eventually, you have to tell somebody about it.
So how do you market your idea to the public without having someone rip you off ?
You need to consider a non-disclosure confidentiality agreement (NDA). Based on my experience as an advocate for a law firm consulting, NDAs are becoming more and more common in business today. They sound quite intimidating but you have to remember that it is a legal document that outlines what information your client can share with you that you are forbidden from sharing with others.
It is a good business practice for several reasons. In your case as an entrepreneur, it is about what sort of information you can share with your prospect partner/investor that they are forbidden from sharing with other parties.
Why do you need a NDA to protect your business idea?
1) The purpose of a NDA is to keep your information private – which is essentially a confidentiality agreement.
2) NDAs are best saved for meetings where someone with experience in launching your product is being pitched.
3) NDAs are essential for a unique and new idea that you may be working on. But it is not necessary for every business idea.
4) By agreeing to execute a NDA, a prospective partner is demonstrating their understanding of the value of your ideas.
5) By asking them to sign a NDA, you are demonstrating that you believe in the value of your ideas.
6) If a business partner is not willing to sign, then you’ve got a red flag whipping loudly in the wind about that particular person/company.
When should you ask a prospective partner to sign a NDA?
This should happen before you provide them with more specific details about your unique ideas, brands, artwork, written materials, concepts, and the product.
Once you’ve discussed your ideas generally with them and determined that there is the potential for a working relationship, and then you should require that they sign an NDA, before you disclose the specifics of your ideas.
If you want to take an informal survey about your product and/or incubate your idea at some point. So do you ask for an NDA then or not? That is a personal decision based on how unique you feel your product truly is and how important it is for you to be first in the marketplace. If you ask someone to sign an NDA and get a “NO,” you will have to decide if the benefits of disclosing will outweigh the risk of someone beating you to the finish line.
The best way to protect your new idea is to select your business partners carefully and work with people you trust. Only once you have established a sense of comfort and trust with your prospective partner by generally discussing your ideas, then your prospective partners execute an NDA.
Finally, you have to be cautious in the event of a violation of the NDA because the enforcement of its provisions is an expensive proposition and there is no guarantee of success. However, it is far more advisable to have an NDA in your pocket than no protection for your valuable ideas and products at all.