Most businesses have some type of proprietary information. It may be a secret recipe or plans for a new product. However, your financial data and customer records are also proprietary information. The health of your business depends on safeguarding all of that information.
That doesn’t have to be a complicated, expensive process. However, it has to be done right. If you don’t draft documents like nondisclosure agreements (NDAs) correctly or don’t have the appropriate people sign them, people can sell or use your valuable confidential information and you may find yourself with no legal recourse.
One of the most common mistakes that business owners — particularly those just starting a business — make is not having the appropriate contracts in place from the beginning. Many entrepreneurs are too busy getting their business off the ground and don’t believe this is a priority or don’t even think about it.
Some business owners have strong, detailed contracts drawn up, but then neglect to have the appropriate people (employees, contractors, vendors, consultants and sometimes even job applicants) sign it. Once you’ve disclosed information to someone, the damage may be done.
It’s essential to have a system in place with people assigned to make sure the forms are signed and filed appropriately. Another all-too-preventable mistake that many business owners make is losing the agreement after its signed. It’s hard to enforce something you can’t find.
Some small business owners fear that asking their employees to sign confidentiality and nondisclosure agreements indicates a lack of trust. However, they’re a necessary part of doing business. As long as you have everyone sign them, you can’t legitimately be accused of trusting some people more than others.
There’s no good one-size-fits-all NDA. You need one that is created to meet your specific needs. While it’s less expensive to download one off the internet than to have an experienced attorney draft one for you, that shortcut could cost you dearly later on.