Listen up, fellow entrepreneurs! You should all have Non-Disclosure Agreements (known as NDAs) ready and waiting to be used, at the right time. However, don't lead in to any discussion about your start-up idea by whipping out one. I've witnessed new business owners who do this and they immediately put a barrier between themselves and their audience, every time.
In my experienced opinion (yes, that was my legal disclaimer that I am not an attorney), use NDAs only when your discussions with vendors, partners, and investors are advanced. Investors won't sign them until you are down the road, and even then they better not be lengthy with numerous clauses included.
- Since one of your main roles as an entrepreneur is to create a buzz about your concept, then you should learn to use a tool called a slide deck to help you present your business to others. The slide deck is a great lead-in when first courting others about your start-up. It is informative enough that you get your concept across without feeling like you just gave out the recipe. This is a great option instead of handing out copies of your 600 page, leather-bound business plan. What? You don't have such a document??
- If you're concerned about someone stealing your idea or it being compromised in some fashion, then find a way to pitch your business without revealing the "secret sauce." You want people to get excited about the idea and tell everyone they know. Don't you?
- At the end of the day, it's about EXECUTION! If your only barrier-to-entry is to keep others from stealing your idea, then your business is not sustainable anyway and you're in real trouble. Most business plans are full of great ideas, but a good business plan is useless unless the entrepreneur and team can implement it.
So, the lesson here is to have your NDA, but use it only sparingly. A good example of when to ask for a signature is when investors are in the due diligence process, not when your Uncle Bob is reading the Executive Summary.
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