Why Your Business Needs a Non-Disclosure Agreement to Maintain Your Competitive and Economic Edge?
Anytime you will be sharing your business’s proprietary information with anyone, they should be signing a Non-Disclosure Agreement. Employees, contractors, and collaborators have access to some of your business’s most valuable assets, like business and marketing plans, new product developments, technology, and customer lists, just to name a few. A Non-Disclosure Agreement contains provisions that protect your legal right to receive the return on your business’s biggest investments.
Customer goodwill is an invaluable asset, but it’s only valuable if you protect it.
Customer goodwill is what makes raving fans for your business that equate to limitless revenue. And you know what creates customer goodwill? Your business’s trade secrets!
Trade secrets are the money makers for your business. It could be a formula or recipe, process or design, method or tool, or even a compilation of information like your customer list. Trade secrets are unique to your business, so they allow you to maintain a competitive edge over your competition and an economic edge over your customers.
Think of it this way: remember how crazy everyone went about Popeyes’ infamous spicy chicken sandwich? Folks were lined up around the block, cars wrapped around the building – I mean there were actual fights because of the limited supply and heightened demand for the product.
But what if we could have just slid right on over to Chik-Fil-A and gotten our fix? What if KFC had been able to supply us with the goods? Well, people wouldn’t have quite literally lost their minds just to give their money to Popeyes in exchange for the goods. This is what we call a competitive edge. The fact that Popeyes could have gotten away with charging its customers double for the sandwich (considering the demand), is called: economic edge. Popeyes’ competitive edge put them ahead of their competitors and their economic edge is the reason consumers were fighting each other to give Popeyes their money. The NDAs they had in place undoubtedly helped make this landslide win a reality.
Thanks to: an unprecedented marketing strategy that was kept under wraps in order to perfect the launch from start to finish; and a phenomenally flavorful recipe that no one could duplicate; Popeyes created gold with their spicy chicken sandwich drop . . . and an additional $65 million dollars in revenue just in its first few weeks. The sandwich was about $5, Bosses. They turned $5 into $65 million dollars because they kept everything about it a secret, which made it more of a commodity than all the basic lil’ chicken sandwiches we were used to before . . .
Sabeer Bhatia, founder of Hotmail, believes his insistence on collecting 400 executed NDAs from employees, friends, and roommates helped him maintain a competitive edge that eventually allowed him to sell Hotmail to Microsoft for a reported $400 million in stock.
NDAs can be mutual or unilateral. An unilateral NDA is when a party promises not to disclose the confidential information of another party. A mutual NDA is when both parties have shared confidential information which they both are bound not to disclose. If you’ve enlisted independent contractors to work within your business, are pitching to potential partners or investors, or are working with collaborators, an unilateral NDA would likely be your best bet.
Strong NDAs will also have provisions for non-solicitation of employees, customers, and clients, and provisions limiting parties ability to start competing businesses.
Need NDAs for your business that pack a triple punch and protect your most valuable assets by including non-disclosure, non-solicitation AND non-competition provisions? Step inside the Bosses’ Legal Vault and get your hands on one now.