On the one hand, the more you share your business idea with others, the more feedback you’ll receive to help you hone your offering. On the other, the more you broadcast your ‘eureka’ moment, the greater the chances of someone else capitalising on it and beating you to the punch.
Essentially, you need to strike a balance between learning as much as you can about what potential customers, investors and suppliers think of your idea, and not giving away too much too soon.
Approach with caution
Realistically, unless someone shares a passion for your idea and has the time, energy and resources to make it happen, it’s unlikely they will pursue it themselves. In most cases, the benefit of the feedback you can gain on your idea far outweighs any potential risk of somebody else stealing it. But people talk, and you have to be careful to prevent confidential information from falling into the wrong hands – especially if your idea is completely new and potentially game-changing.
It may sound obvious, but think carefully about how and when you share your idea, and who you share it with. Before you approach a potential adviser, customer, supplier or business partner, think about the information or resources you want from them and then decide how much you need to share to achieve this. Don’t let yourself be talked into giving away more than is necessary.
Additionally, to help protect your idea while conducting your market research (particularly in the early stages) try to break things down and assess different aspects of your idea at a time.
Protect your intellectual property
Wherever possible, only share your idea with trusted confidantes (such as friends and family) until you have some basic protections in place. For instance, it is sensible (and doesn’t cost much) to secure your website domain name, and if you plan to set up a limited company to register your business name at Companies House, before you discuss these with people you don’t know.
Likewise, you can’t copyright an idea itself but you can protect your name and brand through trade marks and your designs and inventions through patents. It may well be worth protecting your intellectual property (or at least filing the relevant applications) before sharing your idea with others.
Often the success of an idea depends upon getting key partnerships, supplier or customer relationships in place. If this is the case, you may have no choice but to supply confidential information to a third party in order to see whether or not your idea is feasible, or whether you can make a deal with them.
For instance, if you have a designed a new product you may want to get a prototype made, or to get quotes from a few manufacturers for much it would cost to produce. Likewise, if you are pitching for seed funding from investors, you will have to show a detailed business plan.
In these situations, a non-disclosure agreement (NDA) can help to safeguard your ideas, which could be a vital safety net if your prospective partner already has a relationship with a competitor. An NDA is a legal contract which enables you to disclose confidential information to another party, who agrees not to pass it on to anyone else.
You can use NDAs with potential clients, suppliers, advisers, investors or even employees if you have to share confidential information that could threaten the success of your venture if it fell into the wrong hands.
These agreements can be one-way or two-way, depending on whether both parties are sharing confidential information, and can cover trading or commercial information, drawings and designs, trade secrets such as processes or formulas, client lists and business plans.