Now, there are few duller things to talk about than non-disclosure agreements. So instead, I’m going to tell you a story that I promise is related to NDAs.
In the late 1930s, the owner of a Kentucky service station decided to remove the gas pumps to make more space for his rapidly expanding restaurant.
The owner discovered that among the travellers stopping by, interest in filling their gas tanks paled in comparison to filling themselves up with fried chicken; the recipe to which he had spent the better part of a decade perfecting.
This man’s name was Harlan Sanders, and his Kentucky Fried Chicken was about to become a household name the world over.
As KFC expanded to become the largest fast food operation in the United States, the exact blend of the eleven herbs and spices coating this finger lickin’ good chicken remained a secret known only to its inventor.
Nowadays, the original recipe, signed by the Colonel himself, is locked in a safe at KFC HQ in Louisville, Kentucky. One half of the formula is prepared by one spice company while another prepares the rest, with only the completed blend delivered to franchises. It is one of the most famous trade secrets in the world, and has been called one of the company’s most valuable assets.
So complete is KFC’s dedication to their fabled secret blend of herbs and spices, their official Twitter page only follows 11 accounts: six public figures all named Herb, and the five Spice Girls.
This is real. See for yourself if you don’t believe me.
Only a handful of executives at the multinational company know the famous formula. Needless to say, there are some serious confidentiality agreements in place to keep it that way.
See, told you we’d get there eventually.
While few trade secrets rival the mythical status of KFC’s Original Blend recipe—with Google’s search algorithm and the recipe to Coca-Cola being notable exceptions—protecting confidential information is a common occurrence in many business arrangements.
When sensitive information is on the line, there is a commonly used document to protect against its wrongful release.
The non-disclosure agreement
As far as legal documents go, the non-disclosure agreement (NDA) is pretty cut and dry.
Though they differ depending on the nature of the potential partnership between two or more parties, their general purpose is to define confidential information and protect against the wrongful dissemination of that information.
Confidential information can be anything integral to a company’s competitive edge and economic success. Trade secrets (like the Colonel’s herbs and spices), customer lists, algorithms, proprietary designs, financial information, and business processes are just a few examples of the kind of info commonly protected under an NDA.
Now, few salespeople jump at the prospect of letting a lengthy NDA process draw out the time to close.
After all, time kills deals. No one, buyers or sellers, gets excited at the thought of waiting around for days or even weeks for the intricacies of an NDA to be worked out and agreed upon.
So if you’re used to deploying NDAs, it’s likely this is a non-negotiable part of securing new business. But even if the necessity for NDAs is not up for debate, the means of delivery is.
Before we dive in: any attorneys in the house, I apologize in advance. I get it, NDAs are important. But that doesn't make them exciting, and it doesn’t make them any less of a potential obstacle on the road to a closed deal.
Are you optimizing the delivery of your sales documents?
Im’a borrow one of Proposify’s Director of Sales Dan Hebert’s expressions here: If you’re still sending your prospects important sales documents like NDAs as PDFs via email/real mail/fax (is fax still a thing?) for them to open, print, sign, scan, return, etc…
You’re a dinosaur.
And your competitors are beating you to the punch.
Colonel Sanders did more than just invent the recipe for the perfect piece of fried chicken, he mastered the most efficient method of cooking and serving it, too.
He leveraged the pressure cooker—revolutionary culinary technology at the time—to cook his chicken to the perfect taste and texture four times faster than pan-frying.
If confidentiality agreements are an unavoidable component of your sales process, have you done everything you can to optimize their creation and delivery? Or are your potential customers waiting far too long for a pan-fried NDA?
Maybe it’s time to run your sales documents through the pressure cooker.
In honour of the Colonel and his secret herbs and spices, here are eleven things to keep in mind when optimizing your NDA creation and delivery process.
1. Know exactly what it is you are protecting
NDAs are designed to protect the wrongful release of confidential information, but what exactly makes confidential information…well, confidential?
As a sales pro you need to know what information your company deems classified. Don’t get yourself in trouble by releasing information without the proper legal protections.
A good NDA will include a comprehensive definition of the ‘confidential information’ in question. (This is the bit the lawyers refer to if things get ugly and legal action is required.)
You’ll need a working knowledge of this technical definition and how it relates to what you can disclose in the early stages of a deal and what needs to stay under wraps until an NDA has been signed.
2. The right time to send an NDA
Timing is critical in sales. Leading with an NDA is just like rushing in with an offer for a demo on the first call with a lead (and remember, you have a killer sell sheet for those early interactions).
If an NDA is an inevitable part of this potential business relationship, deciding when to deliver it to your prospect could be the toughest part of the whole thing.
Too soon and you risk coming off jumpy and inexperienced. Too late and all your work up until now may have been for nothing.
Getting a prospect to sign an NDA upfront reduces the likelihood of roadblocks further along in the sales cycle. You don’t want a deal to stall after days or weeks or months of getting it to where it is when a prospect balks at signing an NDA.
Identify the exact moment of the sales cycle when the sharing of confidential information will begin and build the delivery of an NDA into this part of the process.
Make sure your prospect knows they’re about to get the goods, too. Tantalize them a little, like so: “I’ll tell you three of the herbs and spices, but for the other eight I’m gonna need you to sign this…”
3. The wrong time to send an NDA
Presenting an NDA to a potential partner at the wrong time has the potential to paint you as inexperienced and overly litigious; someone who’s more ready to rely on legal protection than invest time into building a relationship founded on trust and mutual benefit.
This is especially true for smaller, growing businesses and entrepreneurs. With large and enterprise companies, the NDA process tends to be a little more baked into the sales process, with the confidential information in question more clearly defined than a business who is still finding their feet.
For business circumstances involving investment, technical consulting, and other services or partnerships that require an in-depth knowledge of your modus operandi, an NDA can sometimes hinder more than help.
The type of people you're talking to will likely not have the time nor the desire to snatch your nascent idea and pursue it on their own. Plus, they may unknowingly kneecap themselves or their clients by signing a document stating they will not, by law, compete with your idea.
NDAs are powerful tools, use them wisely.
4. An NDA might be a legal requirement
For your confidential information to retain its legal status as a trade secret, the holder of such information must take reasonable steps to keep it confidential.
There are several ways to protect confidential information. Obtaining a patent is one. But patenting stuff is expensive and time consuming and generally doesn’t apply to things like customer data, market research, or sales processes.
(I.e. all the stuff you’re likely trying to keep secret.)
Fun fact: The Colonel didn’t patent his Original Recipe because patent applications must include instructions on how to make whatever it is you want to patent. His secret would have been safe for a while, but patents only last for 20 years, unlike trade secrets which carry perpetual legal protection, as long as they remain secret.
Once patents expire, the legal protection expires along with it. That would have opened up his recipe up to copycats well within their legal rights to fry up some Kentucky Fried Chicken of their very own.
NDAs are the most common and most efficient way to keep trade secrets secret.
5. Who’s gonna sign it?
Your prospect? Their boss? Their legal team? Don’t presume just because your contact has buying power they’re also authorized to sign legal documents from an outside company.
Find who’s going to be the one to leave their mark on your NDA and make sure it’s their name you print above the line. These small considerations go a long way in demonstrating your professionalism and attention to detail.
Signing the NDA yourself before sending it leaves the ball entirely in their court and adds a little urgency to the whole arrangement. Plus, it’s one less step on your end, however minute.
6. What if they won’t sign?
Venture capitalists (VCs) are notorious at showing you the door the moment an NDA comes out.
Seeking investment capital is just one of a variety of business partnerships where an NDA may come up, but a VC’s general reluctance to sign an NDA serves as a good case study into what to do when your prospect won’t sign.
Perhaps you’ve pulled out the big guns too early in the process. Would you sign a legally binding contract coming from someone you just met? From a company about which you know very little?
Perhaps the terms of the agreement aren’t reflective of the reciprocal nature of a contract. If the signee can’t see the value of signing, all they’re doing is creating seemingly unnecessary liability.
Like any other sales document, an NDA must be delivered at the right time to the right person; someone who understands the necessity of this step to the value of the partnership which is forming.
Yet sometimes a refusal to sign might not be totally on you, and deploying an NDA can be a good way to feel out the integrity and commitment of a prospect.
7. When you should sign an NDA, but don’t
In extreme cases, the refusal to sign an NDA may be nothing more than a ploy to get you to spill your guts and lay out the blueprint of your technology or strategy.
And before you pull out the tinfoil hats, know that this actually happens. The most infamous example involves Google and Yelp.
Back in 2009, during acquisition talks between the search monolith and the popular business directory, Yelp apparently divulged a little too much. Sure enough, the acquisition fell through, and soon after copycat products began to emerge based on content Google scraped from Yelp.
This infamous maneuver was even parodied in HBO’s Silicon Valley.
An acquisition is exactly the place you’d expect detailed and confidential business plans to come up. But when the deal doesn't materialize, the lack of a confidentiality agreement could leave you wide open to corporate tomfoolery.
8. Using NDAs strategically
Getting a prospect to sign an NDA is a good chance to assess their commitment and willingness to progress with discussions with you and your company.
Using an NDA as a litmus test to gauge a prospect’s interest can be a useful way to decide if this prospect is worth pursuing, or whether they’ll balk at the idea of signing an NDA further along the deal cycle after you’ve sunk an even more significant portion of time into the deal.
Similarly, refusal to sign an NDA could be a red flag in and of itself. If you’re using an NDA at the point of confidential information transfer (i.e. correctly) and your prospect won’t sign, this could indicate that they don’t take confidentiality seriously, or worse, they’re trying to get confidential info out of you without an agreement in place.
A couple of our Proposify team members had an experience when they worked at a local marketing agency here in Halifax that illustrates how a lack of a confidentiality agreement can affect the bottom line and waste a lot of time…
The agency, lets call them Agency X, pitched an idea for an advertising campaign to a local semi-professional sport team. We’ll call them Company Y.
Agency X wanted to place ads above urinals in bars all around town to promote an upcoming tournament and showed their concept to Company Y during the pitch. Company Y passed on the contract, but then went ahead and ran the campaign anyway, without Agency X.
Moral of the story? Agency X should have asked Company Y to sign an NDA before they pitched the idea for a great campaign. They’re reminded every time they take a leak at their favourite pub.
9. Is the feeling mutual?
If you’re in an arrangement where both parties need to show their cards before proceeding with a business relationship, a mutual NDA (MNDA) may be in order.
As the name suggests, a mutual, or bilateral, agreement stipulates both partners must keep their traps shut when it comes to the juicy deets.
These two-way agreements have utility of their own, for two big reasons:
- Even if you won’t be privy to the other company’s confidential info, a mutual agreement shows you’re willing to put your money where your mouth is, building trust by demonstrating you take their confidentiality seriously
- For bigger deals which have the potential to stretch out for months or even years, there may come a time where you may need to see your prospect’s company’s proprietary information, or vice versa. If there’s a mutual agreement in place, you don’t need to sign another NDA, smoothing out the process and making you look like a proactive, foresighted business Yoda.
10. Does my lawyer know about this?
NDAs are legally binding documents, and, as such, need to be prepared by a legal professional.
It is likely this is painfully clear simply by the fact you need to use one, but I don’t think I need to tell you that when it comes to NDAs, winging it is not a good way to go about getting one together.
Please also remember: we are not lawyers, and none of this information constitutes legal advice.
11. Prepare for the inevitable back and forth
A drawn out to-ing and fro-ing is an unfortunate reality when dealing with legal documents. You need to be ready for the time this back and forth will add to the deal.
Like I mentioned earlier, NDAs are pretty cut and dry, but there may still be some intricate details that need to be hashed out.
If there are clauses that don’t appease one party, they’ll want to amend it and send it back to you for revision. If their amendment doesn’t jive with your folks, you’ll edit it and send it back for another round of consideration…
You get my drift.
The ping pong is kind of hard to avoid in these scenarios. Meanwhile, the deal is sitting there getting colder, like a bucket of KFC Secret Recipe at a picnic that you can’t tuck into quite yet because Uncle Mike’s still setting up the awning.
Unless, of course, you...
Create an NDA with Proposify
We’re no one-trick pony.
Alongside proposals, NDAs are one of a myriad of sales documents Proposify makes faster, smarter, and more efficient.
When you send an NDA with Proposify, you’ll know when your prospects view your document and be notified the moment they sign.
When it comes to creating and sending an NDA, it’s as easy as selecting a ready-to-go agreement template from your content library. Plus, eliminate the mind numbing task of manually entry with variable fields; meaning you enter client information once, and it auto-populates the entire document.
If your prospect has any questions, suggestions, or amendments—of the holding-up-the-deal variety—address them immediately with live chat right within the document.
And when they’re ready to sign, they can do so with legally binding electronic signatures from any device.
When it comes to deploying critical documents that move your deal along from lead to close, Proposify acts as the pressure cooker AND the secret herbs and spices.
How to make an NDA in Proposify
Whether you’re using our template or crafting one from scratch, creating an NDA in Proposify is super straightforward.
Outside of a letterhead or other minimal branding, they don’t need to be very design-heavy documents. After all, the purpose of an NDA certainly tends toward pragmatism over persuasion.
Crafting an NDA is as simple as copying and pasting your text— which has been approved by your legal team, of course—populating your prospect’s details, and adding the required signature boxes, and hitting send.
Here’s a detailed breakdown of how to cook up an NDA in Proposify which runs you through everything you need to know.
And there you have it, who woulda thought Kentucky Fried Chicken and non-disclosure agreements had so much in common?
Proposify makes it easy to get ALL of your sales documents out the door faster. If NDAs are necessary, make like the Colonel and leverage the technology at your disposal to optimize the creation, sending, and signing of documents.
Your customers will be wowed by the speed at which you breeze through the dull yet critical formalities of a deal, and you’ll be one step closer to closing it.