A business plan non-disclosure agreement is a document intended to protect private information about your business plan. It notifies the other party that you intend to share confidential information. It lays out potential penalties that the other entity, often a company or a potential business partner, will have to pay if they disclose information about your business plan.
Your business plan NDA allows you to share potentially sensitive information about your business or upcoming business without worry that the person you’re sharing it with will use that information for their ends or disclose it to your competitors.
When To Use
- Before sharing your business plan with a potential investor.
- Before sharing information about your future business with potential customers.
- Before discussing information about a future business with a potential partner.
- When sharing your business plan with a bank before receiving a loan.
What Can a Business Plan NDA Protect?
A business plan non-disclosure agreement can protect confidential information about your business or future business, including:
- Business strategies, including any strategy intended to help set your business apart from the competition
- Marketing plans, branding, and other critical information about how you intend to reach out to potential customers
- Customer lists
- Any trade secrets or proprietary technology relevant to the future of your business
- Financial information, including potential earning projections
Your business plan may contain a great deal of information about your business that could give your competitors an edge if they had access to it. Your business plan non-disclosure agreement helps protect that vital information.
Key Elements of Your Business Plan Non-Disclosure Agreement
There are several essential elements that your non-disclosure should cover to maximize protection for your business.
- Classification of confidential information. Ensure you describe what is considered classified and what the other party should keep private.
- The length of the agreement.
- Any circumstances under which the other party can share vital information. (For example, sharing it with shareholders in another business or with a lawyer or accountant.)
- Who owns the information shared in the business plan?
- What occurs if your relationship with the other party ends? Include information about what should be done with any copies of information shared, including both paper and digital copies.
Both you and someone with legal authority to act for the other party should sign the NDA.
Sample Business Plan Non-Disclosure Agreement
Tips for Negotiating and Enforcing a Business Plan Non-Disclosure Agreement
If you plan to share confidential information about your business plan, ensure a business plan NDA is in place.
- Avoid sharing any confidential information before signing the agreement.
- Clearly define the confidential information.
- Define how the other party is expected to use the information you have shared, which will help determine when they have stepped outside that agreement.
- Require the other party to return confidential information or show proof of its destruction if the agreement is terminated.
- Lay out clear terms regarding what will happen if the agreement is breached.
React quickly to any infractions of your business plan non-disclosure agreement so that you can continue to protect your business.