How Confidential is Your Business Plan?5:39 AM
Usually when entrepreneurs need to borrow additional finances from investors or bankers they are as...
Usually when entrepreneurs need to borrow additional finances from investors or bankers they are asked to put their business ideas and projections on paper so as to clearly demonstrate to the potential lenders or investors the profitability and viability of their enterprises.
Also read: Business Planning Process: Launch Your Small Business Startup
However, the biggest question that most entrepreneurs ask before going ahead is ‘are my confidential business plans safe?’ The truth of the matter is that once information has been shared; it is no longer considered confidential. The entrepreneur takes an even bigger risk by exposing their confidential business strategy to outsiders in the hopes of being financed, this is a huge risk because there is no certainty that the requested money will eventually come into the enterprise.
Even though institutes such as banks may swear to uphold integrity and not to divulge client information to a third party, information passed on to them is not 100% safe because regardless of their principles and moral codes; banks are comprised of many people that have different intentions and a vast majority of these people working for banks are equally vulnerable to moral decay as such they may be selfish or greedy.
This means that most business plans that are submitted to banks are accessed by people who will use them for their intended purpose to evaluate the business viability as well as for undisclosed purposes such as selling them to third parties or secretly establishing their own private businesses under the guidance of a client’s business plan.
Also read: 10 Tips For Young Entrepreneurs To Avoid Premature Failure
In most extreme cases, many business plans and loan applications have been rejected but somehow new and similar businesses have suddenly emerged; this leaves entrepreneurs in awe while they wonder how an industry that was largely dormant suddenly becomes very active with so much competition.
Entrepreneurs should be careful and avoid falling in these traps especially in Zambia where breaching confidentiality clauses and copyright infringement hold very little water when brought before a judge in the courts of law. The Zambian law does not support people who are aggrieved in such instances because it is difficult to prove beyond reasonable doubt that a particular business plan was illegally transferred to somebody else.
The same applies for public entrepreneurship and business competitions; entrepreneurs should be careful to avoid exposing their strategy in the vain hopes of being funded. In such a case, the entrepreneur should consider the credibility of the organization hosting the competition to avoid being swindled.
This article is not intended at discouraging entrepreneurs from reaching out to financial institutions or borrowing, but we are simply urging people to be very careful of who they allow to have access to their business documentation, even though business is a risk; the risk can be mitigated by identifying who to trust and who to ignore.
Guest post written by Andrew Zaraki Nguvu