As someone who operates your own small business, chances are, you have ideas, blueprints, recipes, product designs or other elements relating to business operations that you do not want falling into the wrong hands. Maybe you have a secret formula you use to produce a particular product or an exclusive list of contacts you use to conduct business, or perhaps you own a restaurant and feel it necessary to protect your time-tested secret recipes.
In many cases, these elements constitute “trade secrets,” which are often formulas, practices, processes or methods that you use to make your business stand apart from its competitors. If the wrong person or entity gains access to your trade secrets, it can cost you considerably, but one measure you can take to help protect them is by having your employees sign nondisclosure agreements.
How NDAs protect your business
NDAs can contain a variety of information relating to protecting your company’s secrets and intellectual property. A good rule of thumb when creating an NDA is to be very specific about exactly what it is you are protecting. For example, if sharing electronic data, only, is prohibited, say so, but if any oral conversations you may have with your employees are also confidential, specify this in your NDA.
Another important determination to make in your NDA is exactly when it applies. For example, if you want your employees to have to hold on to company secrets even after their employment period ends, again, specify this in your NDA.
An important preventative measure
Protecting your trade secrets and your business’s intellectual property also protects your ability to maintain a competitive edge over your consumers. While you probably would not hire someone you expect would turn around and divulge company secrets, keep in mind that many workers who leave their positions soon find a new job in the same or a similar industry. Without an NDA in place, he or she may share your company secrets with his or her new employer.
NDAs are a solid way to protect your business’s intellectual property, and having your employees sign them can reduce your odds of having someone take advantage of you.