Many small business owners have a preconceived misconception that their business contains virtually no information that is worth protecting. Because these small businesses believe that they don’t have their own special “recipe” or secret “formula” that is the cornerstone of their company, owners presume that protecting their business information is not as valuable as it is for major companies such as Google or Apple.
However, in reality, every single business has some kind of confidential and important information, whether that is their customer list, marketing plan, financial data, or even a sales or investment deck. In order to ensure that your business’s private information is protected, every business, whether big or small, should consistently implement a Non-Disclosure Agreement (“NDA”) before discussing private business information with anyone outside their company.
What is an NDA?
An NDA in simplistic terms is a contract that legally binds someone to keep a secret. As we all know from experience, keeping a secret is not always easy, and an NDA can act as a tough guideline to ensure that information regarding a business is kept private. This contract creates a relationship between a business and its partners whether they be employees, contractors, clients, or any other party that may have access to important and non-public information within a specific business. By creating a contract tailored to specific parties, a business can ensure that their information is protected and can prevent the release of confidential information to the public, and getting into the hands of competitors.
Key Elements of an NDA
An NDA must consist of various elements that will maximize its effectiveness and ensure the protection of vital information. The agreement should always identify the specific information that it is meant to be protected. While not everything your company does needs to be protected, an NDA should specify in detail what type of information can and cannot be shared with the public. An NDA should also state a time frame, as most non-disclosure agreements do not last forever, as it is important to set a specific frame for the agreement to avoid any confusion between the parties. Also, the NDA should both define the legal punishments for breaching the agreement as well as a method of resolving a dispute within the agreement. It is extremely important to clearly outline the details of the agreement in addition to the ramifications of a potential disagreement within the contract.
Why Is This Important For A Business Owner?
Running a business is not always easy and numerous challenges can arise in multiple facets of a company. As a business owner, it is important to take the necessary steps to limit the amount of issues that your company may face. NDAs are an extremely important step that all businesses should implement in order to protect vital information and prevent the unwarranted disclosure of their confidential information and trade secrets. Without NDA’s, it would be impossible to make any business unique and effective, as the entire world would be able to have access to every piece of information within a company. Don’t make it harder on yourself to protect your company. Use NDAs to keep private the things that distinguishes your business and makes it invaluable.
If you’re a business owner looking for assistance with reviewing or drafting an NDA, contact us for more information.