Brought to you by Upmetrics, a #1 business plan toolset powered by an interactive business plan builder, templates and automated financial.
Table of Contents
Was this article helpful?
Thank you! We have received your rating.

Writing a Confidentiality Statement for Business Plan

Every company has a unique identity that sets it apart from its rival companies in the industry. This can be a combination of various aspects: it can be the way you set your goals, your marketing strategy, your manufacturing process, or your entire business plan.

As crucial as it is to create a business plan that helps you stand out, it is perhaps just as crucial to protecting your plan from any potential intellectual property theft. This is where a confidentiality statement for your business plan helps you safeguard your valuable assets.

A confidentiality statement is a document which states that the information disclosed to the recipient can't be disclosed to anyone outside the agreement. It is an agreement made between two parties before they enter a deal or exchange any sensitive information that is wished to be kept confidential.

Why do you need a confidentiality statement?

Even though trust is essential between partners or investors, there's always a need to be cautious while handing over your business plans. Even though the organization you plan to work with values confidentiality, everyone involved in it might not.

Your business plan is one of the most elaborate and classified documents. Before disclosing any information, the first and foremost thing is to sign a confidentiality statement. This will avoid the misuse of any information disclosed between the two parties.

How does a confidentiality statement protect you?

When a confidentiality statement is signed, it is agreed by both parties that they will not expose any of the information that is discussed or presented in the business plans. Additionally, the document should also mention the penalties in case of a violation of the agreement.

If the other party violates the statement of confidentiality, you can proceed legally and receive compensation for the damages you had to bear because of the violation. The compensation will be paid according to what’s mentioned in the contract.

The absence of a confidentiality statement is an invitation for others to use parts of your business plan. Although copyright laws can help you claim most of your information, some of it can still be unprotected.

Without an agreement, the legal system may not recognize it as a violation.

Creating a confidentiality statement for the business plan

Most companies include a brief confidential statement on their business plan cover page. Although it is not a requirement, it delivers a quick message that the document is highly classified. Furthermore, it is essential to create an exclusive document.

Before creating an agreement, always check with your attorney to be sure of what’s valid according to your state laws.

To write a stringent confidentiality statement for your business plan, these are the elements that you must include:

1. Date of effect

The date of effect is the date from which the confidentiality statement becomes active. An agreement is not valid until all the parties sign it; the date of effect follows this.

2. Parties involved in the agreement

It is extremely important to specify the parties that will be signing the agreement. If someone you want as a part of the confidentiality statement hasn't signed it, they're not bound by the clauses mentioned in the document.

For instance, two companies are getting into a contract and the CEOs, representing the entire company, are signing the document, it is essential to mention that all employees are also bound by the agreement even when they haven't signed it.

Failure to mention such details can be used as loopholes to expose the information.

3. Agreement terms

Describe and mention all the terms that both parties are agreeing to. This is a crucial part of the agreement as it includes all the details that need to be kept confidential. Anything that isn’t included is not protected.

Here, you can also include that the recipient needs written consent from the disclosing party—the owner of the information, in case any information needs to be disclosed to a third party who isn’t a part of the statement of confidentiality.

4. The non-confidential part

Along with mentioning the confidential part of your business plan, you also mention the non-confidential part of the agreement. In most cases, there’s a lot of information that is acquired from other sources. This information can’t be listed as confidential.

Any information that is relevant to the receiving party can’t be listed as confidential, some of these are:

  • The information they owned before the agreement
  • If they legally received it from another source
  • The information they need to disclose in a lawsuit or administrative proceeding
  • If the information is being or has been developed by them.

5. Consequences in case of agreement’s breach

Here, you mention all the legal consequences that will follow if the receiving party violates the agreement. This can include the procedure and the monetary penalties. According to the uniqueness of the information exposed, the compensation can vary.

Mention the state or country laws that will govern the agreement.

6. Limits of the usage of information

The objective of a statement of confidentiality is to restrict the usage of the information that is disclosed to the recipient. Here, you mention the extent to which the information can be used. Also, specify the standard of security that needs to be followed while handling confidential information.

7. Date of termination

Every agreement has an expiry date, after which both the parties are free of the binding clauses. This termination date is set based on various factors like the end of the partnership, the end of a project or an event, or simply the end of the period mentioned in the agreement.

8. Miscellaneous clauses

This part of the agreement is usually at the end of the document, which includes any other clauses that don’t necessarily fit into the above categories, but the owner of the information wants to include.

9. Signatures of all parties

Clearly, this is the most important part of an agreement. Without the signatures of all the parties, the document is pointless and is of no value. The agreement, as mentioned previously, can’t go into effect unless everyone involved signs it.

We have written a confidentiality statement example for you, including the above-mentioned elements. This will help you get a better understanding of how to write a confidentiality statement for your business plan.

Statement of confidentiality sample (key points)

This BUSINESS PLAN NON-DISCLOSURE AGREEMENT (hereinafter known as the “Agreement”) between ______ (hereinafter known as the “Company”) and ________ (hereinafter known as the “Recipient”) becomes effective as of this ____ day of ____, 20___ (hereinafter known as the “Effective Date”).

Article III: Term

☐ - The Recipient’s obligations of non-use and non-disclosure concerning Confidential Information will remain in effect in perpetuity.

☐ - The Recipient’s obligations of non-use and non-disclosure concerning Confidential Information will remain in effect for ____ years from the Effective Date.

Article VIII: Governing Law

This Agreement shall be governed by the laws of the State of ____________, without regard to conflict of law principles.

Article XII: Notices

Company’s Address

______________________________

Recipient’s Address

______________________________

Company

Representative Signature:
Date:
Representative Printed Name:
Representative Title:

Recipient

Recipient Signature:
Date:
Recipient Printed Name:

Protect Your Information with a Confidentiality Statement

Protecting your ideas, marketing strategies, or your business plan from being misused is a responsibility every business owner should commit to. You can do that by creating a confidentiality statement for your business plan and ensure that your business interests are protected and in good hands.

Ayush Jalan
Ayush Jalan
Ayush is a writer with an academic background in business and marketing. Being a tech-enthusiast, he likes to keep a sharp eye on the latest tech gadgets and innovations. When he's not working, you can find him writing poetry, gaming, playing the ukulele, catching up with friends, and indulging in creative philosophies.
Reach Your Goals with Strategic Planning

We're helping entrepreneurs to Business Planning, Cash Forecasting and Creating a Business Models and Pitchdecks.
Create an account and let's get started.

No Risk - Cancel at Any Time - 15 Day Money Back Guarantee