To NDA Or Not To NDA?

December 4th, 2007 | Categories: financing, launch, marketing, off topic, strategy

ContractsThat IS the question…

When ‘exposing’ your business plan to colleagues or known business acquaintances, is it always necessary to get them to sign an NDA? The fickle readers will tell me yes. The less cautious readers will say no. Here’s the dilemma:

We all know what an NDA is and what it is supposed to accomplish. But can trusted business contacts actually be trusted? Paperwork aside, the biggest downfall of an NDA may be the loss of respect and trust. Let me explain…

If I get a colleague to sign an NDA, I’m basically alluding to the fact that I don’t trust them. I either think they are going to talk to someone about the idea, or they might steal it for themselves. Bear with me here… I know it’s a long shot, but that might be the thought process of your colleague. In other words, they believe that you don’t trust them. Consequently, they begin to question your business (and perhaps, personal) relationship.

Don’t get me wrong, any understanding party should have no problem signing an NDA. However, some may question your intentions and self-assess your judgment whether you like it or not.

One key argument for NOT signing an NDA falls around execution. Sure, someone may know your business plan top to bottom, but the execution is where 99% of challenge lies. Most people don’t have the time, patience, expertise, or determination to take it to the next level.

Obviously, when exposing such a document to lesser known business contacts or potential investors, an NDA is essential. A certain level of trust has not yet been established. Therefore, such a request should go without saying. But when dealing with known individuals, the rules change. A level of trust has already been established to some extent. The question now becomes… does that level exceed your willingness for them to sign an NDA?

So basically, I keep jumping back and forth over the fence on this one (although I am leaning toward “don’t be a fickle bum”)…

What is your take on the situation? Do you think that everyone should sign an NDA before viewing a business plan? Do you think it may ruin or put strain on a relationship?

Leave a Comment