Whether you are operating a small scale enterprise or a giant corporation, one critical thing that can define your success is discretion. The success of any business to thrive in a competitive environment greatly hinges on confidentiality. Confidentiality helps you maintain your competitive edge as well as other trade secrets. When you want to keep your operational secrets, strategies, or you have a business plan that you still feel shouldn’t get to the public or competitors’ attention– a non-disclosure agreement will suffice.
What is a Business Plan Non-Disclosure Agreement?
A Business Plan Non-Disclosure Agreement, also known as a Business Plan NDA, is a unilateral contract signed between a business entity and a secondary party (recipient) and restricts the use or access to confidential information. Once signed, both of the parties agree not to disclose the information otherwise termed as ‘confidential’ to the public or competitors, unless with authorized permission from the seniors.
Business Plan NDA is becoming increasingly important in the current world. They help build and strengthen the relationship of trust between two or more business parties. Also, the Business Plan NDA help create an open and free environment for both parties to dialogue and share various business plans without worrying that a consultant/partner will turn to be a competitor. When a Business Plan NDA is accepted by everyone involved, chances of misunderstanding, error, and confusion will significantly be minimized. Before getting into the finer details, let’s have a quick look at the importance of using the Business Plan NDA both for small and large-scale businesses.
The Importance of Using a Business Plan NDA
- The Business Plan NDA helps protect one party from revealing confidential information such as trade secrets, client lists, and, more importantly, strategic business plans to the unauthorized parties.
- It prevents the use of confidential information shared to make undue profits.
- It prevents the likelihood of a dissatisfied or former employee from involving in sabotage by exposing the company’s confidential information to competitors.
- It gives permission for one party to access or use the confidential business information under restricted conditions.
- It defines the ownership of the business plan(s) as well as the dates created.
When Do You Need a Business Plan NDA?
Well, a Business Plan Non-Disclosure Agreement is a must-have for any kind of business plan. Whether your business plan is common, there are still other things you need to keep secret and confidential. For instance, your financial plans should be known by everyone. Again, if you intend to share your business plan, sometimes the other parties may not be ethical in their dealings. Therefore, they may easily share your plan with others. Before you know what’s going on, you’ll be surprised to see other people having the same business plan as yours, and this can affect your foreplane strategy. I am sure no business person wants to go this route. Therefore, in order to avoid such common malpractice, ensure you have the Business Plan Non-Disclosure Agreement any time you are sharing your business plan with anyone.
How to Write your Business Plan NDA?
Often times, many people find it difficult to write a Business Plan NDA due to two reasons: (1) because they don’t know the structure and format and (2) it too involves and tiresome. Well, if you ever experience either of the two difficulties, we have a better alternative for you. Download our free Business Plan Non-Disclosure Agreement templates and get going. However, if you have the time, energy, and ump to write one on your own, the following are key clauses to include:
Introduction of parties
In this section, you should identify the document as a Business Plan Non-Disclosure Agreement and include the dates and names of parties involved in the business plans. Sometimes, you can include the recitals, where you provide the background information of the parties involved.
In this section, you should define clearly what you mean by confidential information. Also, indicate the number of days the company will give share the information with the recipient party.
Recipient’s treatment of confidential information
Here, you need to indicate how the receiving party will use the accessed business plan while maintaining its confidentiality. Also, other exceptions regarding the use of confidential information may be highlighted.
This clause highlights the period by which the recipient will treat the business plan as confidential information. Therefore, you can enter the number of months or years you would want the information to be protected.
No rights granted
This section reminds thee receiving party that even if the right to confidential information access is given, it doesn’t mean that they will own the information.
This clause contains other miscellaneous provisions that are grouped together at the end of the document. The general provisions may include the following:
- The nature of the relationship
- Injunctive relief and indemnity
- Government laws and attorney expenses
Signing the agreement
After the general provisions have been included, the document should end by official signing by the involved parties. Note that each party should sign two copies and keep one for future reference.
Frequently Asked Questions
Business plans aren’t something you can freely share with the public. You only need to share it with specific people who won’t disclose it to the public. In this case, they are confidential documents hence shouldn’t be disclosed to any unauthorized persons.
A Business Plan Non-Disclosure Agreement help to protect the sensitive and confidential information of a business from the public reach. By so doing, it ensures that the good plan won’t be stolen and used by someone else.
Business Plan Non-Disclosure Agreement is a legal contract. Therefore, before you consider quitting, you must follow the legal procedure. Alternatively, you can negotiate with the other party’s to reach an agreement.
Just like any other legal agreement, breaking a Business Plan Non-Disclosure Agreement can make you face legal charges, including paying for the financial damages caused by the breach.