Business Plan Confidentiality Statement and Non-Disclosure Agreements (NDA)

When starting or growing a business, you might need to share your business plan and other important information with potential investors, partners, or employees. And, because your business plan will detail not only your gameplan for success, but the unique factors that differentiate your business, you might want to protect its confidential information.

This is where a business plan confidentiality statement and Non-Disclosure Agreement (NDA) come into play. These legal tools try to ensure that sensitive details about your business ideas, strategies, and financials stay secure and are not shared without your permission.

Importantly, please note that I have helped hundreds of thousands of entrepreneurs create and execute on business plans over the past 25 years. In doing so, I have found that most investors will not sign NDA agreements. And, if someone really wants to steal your business ideas, it is relatively hard to stop them. This being said, you should always have an NDA and confidentiality statement prepared. At the very least, this will make readers of your business plan and/or other materials think twice (or more) before considering disclosing your sensitive information.

What is a Business Plan Confidentiality Statement?

A business plan confidentiality statement is text that you include, usually on your business plan’s cover page, that tells everyone who sees your business plan that they must keep the information secret.

Here’s a typical confidentiality statement:

This document includes confidential and proprietary information of and regarding [Company Name]. This document is provided for informational purposes only. You may not use this document except for informational purposes, and you may not reproduce this document in whole or in part, or divulge any of its contents without the prior written consent of [Company Name]. By accepting this document, you agree to be bound by these restrictions and limitations.

Note on Confidentiality Statements

Legally, it is questionable whether just having a confidentiality statement on your business plan’s cover page will protect the contents of your plan. Clearly, it will deter some readers from sharing information, but if you want to get more protection, it is advisable to also use a non-disclosure agreement (NDA) as discussed below. Importantly, most investors (particularly banks and venture capital firms) will NOT sign an NDA. They just review too many business plans, and would open themselves up to undo litigation if they signed such agreements.

Key Elements of a Non-Disclosure Agreement (NDA)

A non-disclosure agreement (NDA) is a type of confidentiality agreement that is designed to prevent the disclosure of sensitive information about your business. When both parties sign an NDA, they agree not to share the confidential information they receive. Here are the key elements to include in your NDA:

1. Identification of the parties involved:

   Clearly identify the disclosing party (you) and the receiving party (the person or entity you are sharing your information with).

2. Definition of confidential information:

   Specify exactly what constitutes confidential and proprietary information, including your business ideas, financial statements, and/or trade secrets.

3. Obligations of the parties:

   Specifications that both parties agree to maintain confidentiality and only use the disclosed information for its intended purpose. All persons involved must be legally bound to maintain the confidentiality of sensitive information.

4. Exclusions from confidentiality:

   Information that is in the public domain or already known to the receiving party does not need to be kept confidential. Additionally, information known publicly at the time of disclosure or that becomes public knowledge without the fault of the receiving party is not considered confidential.

5. Duration of confidentiality:

   The agreement should specify how long the confidentiality obligation will last; typically a period of 1 to 2 years after the agreement is signed.

6. Governing law:

   The agreement should state the laws that apply in case of a dispute (i.e., applicable law), following specific law principles. For example, if you are based in California, you would state that the laws of California apply.

7. Equitable relief:

   If there’s a breach of the NDA, the disclosing party may seek equitable relief, meaning they can ask a court for a remedy other than monetary damages.

8. Signatures:

   The agreement becomes effective once all parties sign it. Without the signatures of all involved parties, the document holds no legal value.

Sample Business Plan Confidentiality Statement and Non-Disclosure Agreement (NDA)

Below is a sample Business Plan Confidentiality Statement and Non-Disclosure Agreement. Note that we are not attorneys, and we suggest having an attorney review this document before using it in your business dealings.

BUSINESS PLAN CONFIDENTIALITY STATEMENT AND NON-DISCLOSURE AGREEMENT (NDA)

This Business Plan Confidentiality Statement and Non-Disclosure Agreement (the “Agreement”) is entered into on this [date] by and between:

Disclosing Party: [Your Name/Company Name]
Receiving Party: [Recipient’s Name/Company Name]
Company’s Address: [Your Company’s Address]

1. Definition of Confidential Information
The Receiving Party agrees that all information disclosed by the Disclosing Party, including but not limited to business ideas, financial statements, marketing strategies, trade secrets, and other proprietary information, is confidential and proprietary information. The Receiving Party agrees to treat this information as strictly confidential.

2. Obligations of the Receiving Party
The Receiving Party agrees to maintain confidentiality and not disclose any confidential information to third parties without the express written consent of the Disclosing Party. The Receiving Party also agrees to use the confidential information solely for the purpose of evaluating a potential business relationship. All persons involved must be legally bound to maintain the confidentiality of sensitive information.

3. Exclusions from Confidentiality
The confidentiality obligations shall not apply to information that:
a) Was already in the public domain at the time of disclosure;
b) Was lawfully received from a third party not bound by confidentiality;
c) Is required to be disclosed by law.

4. Term
This Agreement shall remain in effect for a period of ___ years from the date of execution, unless terminated earlier by mutual written agreement of the parties.

5. Legal Remedies
The Disclosing Party acknowledges that any unauthorized disclosure of confidential information may cause irreparable harm, and that the Disclosing Party is entitled to seek equitable relief, including injunctive relief, in addition to any other legal remedies available under applicable law.

6. Governing Law
This Agreement shall be governed by and construed in accordance with the legal principles of [Your State/Country].

7. Entire Agreement
This Agreement constitutes the entire agreement between the parties and supersedes all prior discussions and agreements regarding confidentiality. This Agreement must be in writing to be enforceable.

8. Execution
This Agreement is effective upon the signatures of both parties. It must be signed by an authorized representative of each party to be valid.

Disclosing Party:
Signature: _________________
Name: _________________
Date: _________________

Receiving Party:
Signature: _________________
Name: _________________
Date: _________________

Conclusion

In summary, a business plan confidentiality statement and Non-Disclosure Agreement (NDA) are tools for safeguarding your confidential information. Whether you’re discussing your business plan with potential investors or employees, these agreements try to ensure that your sensitive details remain protected.

By utilizing PlanPros, you can easily integrate confidentiality protections directly into your business plan, streamlining the process while ensuring your ideas remain secure.

Always remember to have these documents reviewed by an attorney to ensure they meet your business needs and comply with applicable laws.

 

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