New business / non disclosure

Opinion

Did a search but couldn't find much of use (please correct me if wrong.)

I've been working on a new business idea for the last few months and it's getting to the point now that I'm looking to approach a couple of parties to pitch a partnership, seek additional expertise and potentially a small amount of investment.

What's the "best practice" of going about this? How can I approach a party with my idea without risking them saying, "Hell, that's a good idea- I may just go do so myself"?

Advice much appreciated!

Phil_rich

If your idea is a product or design then you need to get it registered and patented before you show too many people.

paddyrg

It's also going to take a leap of confidence ultimately, NDA's show willing but are rather tricky to enforce in practice. You can't really protect an idea, much easier to protect an expression of that idea, so maybe some initial steps towards it would make it easier for the other person to join you than go alone.

I don't know what specific skills you're after from someone else, buy if they were (say) welding, or another practical skill, they may be less likely to want to run a company. Conversely, if you're a welder and are looking for someone to manage the business, they similarly may not be wanting to do the welding to run of with the idea!

Opinion

Phil_rich wrote: »

If your idea is a product or design then you need to get it registered and patented before you show too many people.

Thanks Phil. Not a product or design so no issues there, thankfully.

paddyrg wrote: »

It's also going to take a leap of confidence ultimately, NDA's show willing but are rather tricky to enforce in practice. You can't really protect an idea, much easier to protect an expression of that idea, so maybe some initial steps towards it would make it easier for the other person to join you than go alone.

I don't know what specific skills you're after from someone else, buy if they were (say) welding, or another practical skill, they may be less likely to want to run a company. Conversely, if you're a welder and are looking for someone to manage the business, they similarly may not be wanting to do the welding to run of with the idea!

Thanks Paddy. I've read before that NDA and non-compete clauses are difficult to enforce, but I suppose having the latter is better than not having it, assuming it's not going to cost a bomb.

I'm basically looking to get someone on board to handle the majority of the sales/marketing that also has huge passion, experience and skill with the service we'll be providing, which while it isn't exactly niche it also isn't an everyday thing either. I want a partner with a vested interest in making the business a success; the business isn't going to take off and make millions overnight so keeping control over costs and overheads is going to be important- I think having myself and a partner working with no/low pay (and me giving up a stake in the company) is a better option than taking on a member of staff from the off.

I have two people in mind to approach but both are quite raw so I would almost be investing in them growing as I would in the business.

InsideInsurance

Depending on the size of the companies you are approaching and how deep your pockets are an NDA and non-competition agreement is fairly weak - and in particular the NDA element.

Even if you have an ok case and well worded agreement and appropriate level of non-competition in it they can ultimately tie the process up in knots happily spending £300/hr for solicitors (and IP is the most expensive class of law) knowing you will run out of money a long time before it ever reaches a court room.

Now the plus point is that the majority of people in business, even in my experience of being in insurance and banking, arent actually out there to rob the little guy and a reasonable deal can be struck. A former client took on a few start ups with a good idea and put finance/ expertise in making them directors of their own business unit with some profit share agreement ontop of their normal salaries etc.

Secondly, if you're approaching specialist firms to supply just a bit of the picture (eg developers) then the majority of those firms dont want to run a business selling bobble hats online as developing is what their expertise are.

Do your due diligence on the firms and be selective who you share the ideas with. Ensure you dont share more than you need to. Get an NDA in place but dont rely on it.

Opinion

InsideInsurance wrote: »

Depending on the size of the companies you are approaching and how deep your pockets are an NDA and non-competition agreement is fairly weak - and in particular the NDA element.

Even if you have an ok case and well worded agreement and appropriate level of non-competition in it they can ultimately tie the process up in knots happily spending £300/hr for solicitors (and IP is the most expensive class of law) knowing you will run out of money a long time before it ever reaches a court room.

Now the plus point is that the majority of people in business, even in my experience of being in insurance and banking, arent actually out there to rob the little guy and a reasonable deal can be struck. A former client took on a few start ups with a good idea and put finance/ expertise in making them directors of their own business unit with some profit share agreement ontop of their normal salaries etc.

Secondly, if you're approaching specialist firms to supply just a bit of the picture (eg developers) then the majority of those firms dont want to run a business selling bobble hats online as developing is what their expertise are.

Do your due diligence on the firms and be selective who you share the ideas with. Ensure you dont share more than you need to. Get an NDA in place but dont rely on it.

Thanks for the detailed reply, II, very helpful. At the moment the parties I'm going to approach are individuals, not other businesses, so doing due diligence is a little different to what I'm used to. If it was a regular member of staff it wouldn't be too much of a problem as I could start them on a temporary contract to protect myself, but I've never had to look for a partner.

I'm just a little worried about approaching them and then them going off and trying to do it themselves, but I suppose at some point you have to bite the bullet, right?

Mistral001

Will walking into an office of a prospective investors and asking them to sign an NDA before you start to speak to them really be a good idea? It is unlikely that they would agree to sign it in my view.

Opinion

Mistral001 wrote: »

Will walking into an office of a prospective investors and asking them to sign an NDA before you start to speak to them really be a good idea? It is unlikely that they would agree to sign it in my view.

This is what I'm asking- how do I best protect myself. I agree that walking in to an office and asking someone to sign an NDA before sharing details would probably result in a "thanks, but no thanks." I'm not planning on knocking on the door of an investment bank and begging for millions of pounds, I'm more concerned about approaching someone for their expertise and them having a light bulb moment and attempting it alone.

InsideInsurance

Mistral001 wrote: »

Will walking into an office of a prospective investors and asking them to sign an NDA before you start to speak to them really be a good idea? It is unlikely that they would agree to sign it in my view.

Companies and investors are used to signing NDAs however you have to give them something beforehand to get them interested in the first place. Particularly a company of any size that is going to want a lawyer to review the document before signing it.

Many times I've approach a potential suppliers about doing a deal for a piece of new product development or a promotion etc and the first thing done in an NDA but of course I have the advantage of a major brand to open doors for me.

Now if you are dealing with an inexperienced person then they may get nervous signing a contract.

remorseless

Opinion wrote: »

Thanks Phil. Not a product or design so no issues there, thankfully.

If it isn't a product or design without a patent, even with a NDA how long before something it's replicated? Unless it's something extremely unique, which you would patent... very quickly copycats spring from every corner now days! Though consumers will go where there's ongoing innovation/support IMHO!

Opinion

remorseless wrote: »

If it isn't a product or design without a patent, even with a NDA how long before something it's replicated? Unless it's something extremely unique, which you would patent... very quickly copycats spring from every corner now days! Though consumers will go where there's ongoing innovation/support IMHO!

The idea I'm working on benefits from being in the same industry as my main business, which means I already have a lot of contacts, very good pricing on supplies etc. So while it could be replicated with some hard work and decent investment it wouldn't be quite so profitable or viable.