It may seem preliminary to talk about non-disclosure agreements (NDA) when you’re first starting a new business. After all, you may not feel you have anything worth disclosing.
Look at an NDA as armour. If you were doing battle, wouldn’t you want to protect yourself? Well, my friend, you are doing battle when you enter the highly competitive, albeit virtual, world of online business. Just take a lesson from experienced CEO Jim Sargen, who currently runs start-ups Triactivekids.com and Triactiveamerica.com.
“In my lifetime, I´ve created and managed a number of new businesses,” says Sargen. “I´ve got a lifetime of education and practical experience. However, I am forever in the process of learning new things. Much of this learning comes from the hard knocks encountered in managing a new business.”
One such lesson focuses on Non Disclosure Agreements. “For those not familiar with NDAs, these are legal agreements that are created to protect the "proprietary information", regarding your most valuable company assets, the "secret recipes,” new product designs, not yet copyrighted materials, music, etc, in other words anything that you have creatively produced that makes your company and products unique in the marketplace,” Sargen explains.
NDAs are included in Sargen’s collection of “lessons learned the hard way, because in spite of being urged by our attorneys to make sure that each and every person, including employees, had signed an NDA, a few seemed to slip through the cracks.” As a result, “a contract employee took proprietary information and used it as the basis of creating a competing business,” he reveals.
Because he did not require the signing of an NDA by every employee, “the process of stopping the use of our proprietary information by a competitor was made much more difficult and expensive. With an NDA, the process could have been simplified and a more satisfactory resolution achieved,” Sargen says.
Now that he has learned his lesson, “not only all employees, but all individuals who provide support to our company, either as independent contractors or through service agreements, are required to sign NDAs. We are negotiating agreements and developing a national distributor network. All companies we negotiate with are required to sign NDA,” says the experienced TriActive CEO.
“Keeping it simple, everyone who either works for you, with you, or on your behalf should sign an NDA. One lesson I learned early is that education never comes cheap. However, it becomes extra expensive when you fail to learn from your mistakes,” Sargen advises.