Protecting your idea from unscrupulous people can be put you in a precarious position. On one hand you would like to get the benefits of sharing your idea with others. These benefits can be invaluable as you venture into a new business. A new pair of eyes with a fresh view point can help you identify; problems with your assumptions, new opportunities that haven’t been explored, and/or just provide constructive criticism. But the idea of someone stealing your business idea and starting it themselves can be a very real and paralyzing fear.
Anecdotally, there is a story from my hometown, where two local university students wanted to open a "drive up only" burger joint. They took their idea to a local entrepreneur who made lots of money in various enterprises including car dealerships and showed him the business plan because they wanted to open it in one of his defunct used car lots. He asked to keep a copy of the business plan for "review" for a few days, which turned into weeks and a couple months later he opened a Hamburger Heaven in that very location.
There are stories like this, probably, in everyone’s hometown. So how do you share your business plan with the right people and not the wrong ones…and…how do you protect yourself from those bad apples. Here are some ideas:
- Turn to the Professionals - Share you idea with a local SBDC or SCORE agent. Counselors at these government run offices are sworn to confidentiality. Also, they have spoken with and mentored many entrepreneurs before you and inevitably will help give your business idea a more solid foundation.
- Get a Mentor - Don’t want to go to the government or have "been there, done that" without success? Enlist a business mentor. Look through your business network for someone in a non-competing field and ask them to mentor you. You can meet these people at Chamber of Commerce functions such as Business After Hours events or through local Business Network International groups.
- NDA / Covenant to not Compete - Before you share your business idea ask the person to sign both a Non-Disclosure Agreement (NDA) or a confidentiality agreement. These documents forbid the person from sharing your idea with others without your expressed consent. Alternatively or additionally you could have them sign a covenant not to compete. This is essentially an agreement that a person signs. You can find many samples of both these documents online.note: These documents are not worth the paper they are printed on if they are not enforced. Enforcement is expensive and usually requires an attorney. That said…they provide more of a psychological deterrent to the signor just knowing they exist.
OK…so with that out of the way here is the flip side of the coin. For the most part…you don’t have to worry so much! As Jack Welsh, the former CEO of GE said when asked about protecting ideas (paraphrasing here) "it is about execution not ideas".
There are very few completely new or original ideas. 99.9% of the people you would potentially share your idea with have no interest in stealing it (in fact as most entrepreneurs experience, people will probably doubt the viability of your business idea) from you. Only about 10% of the population is entrepreneurial in the first place. Of those, how many have the expertise, education and experience to successfully launch the same business you want to start…probably none. Finally, even if they did, the person who is better are implementing the business model will be the successful one. It is about execution and implementation NOT ideas and planning.
So in summary, share your idea. Share it with the right people and use the right tools to protect yourself…but share it with as many people as you can. You will find your business idea and therefore your actual business is better for it.
By the way…regarding the guy who stole the idea for Hamburger Heaven above…he went out of business after about a year. The college students who came to him with the idea, opened for business in a different location and are still in business today over a decade later. Proof that execution is more important that ideas.
I hope this helps