If you are starting a new small business you need a good, viable idea; you need a solid plan of action; and you need a goal to work towards. But before you do anything; even before you write a business plan, open a business bank account or apply for a telephone, you need a name for your business.
But wait. While choosing a name is one of the key decisions you are going to have to make before launching your business, there’s a whole lot of paperwork that needs to be done first.
Apart from the fact that your business name needs to be meaningful and memorable, and should be the marketing link to whatever goods or services you plan to provide, there are certain legalities that may preclude you from using what you consider to be the perfect name. So save yourself potential heartache, and be prepared.
Decisions before Choosing a Business Name
Sure, many people come up with a business name (or a domain name if they are planning to do business on the Internet), and immediately swing into action. It’s really not that difficult. If you are going to operate as a sole proprietor you won’t have to register you business, and there’s minimal control from any administrative area.
This is true of most Western world countries. But in the US, there are many states that insist business operators who are sole proprietors, use their personal name as the business name, and that they register the name as a sole proprietorship. That can work if you’re a writer, like me, but if I was going to market handcrafted silver cutlery for a group of artists, it wouldn’t benefit the business.
Being forewarned, you’ll know that the workaround here is to formally file another name, known as your Doing Business As (DBA) – or in some countries, trading as (t/a) – trade name, fictitious name, or assumed name. Just check what is required in your state.
Most people who start off a business as a sole proprietorship really do start out small. If you want to minimize your risk of personal liability, look at all the other possibilities, because there are different legal, financial and tax considerations. These include nonprofit organizations as well as limited-liability companies (LLCs) and partnerships.
Like a sole proprietorship, a partnership name is that of the people who “own” the business – namely the partners whose names appear on the partnership agreement. For this reason a DBA is frequently registered.
For LLCs and other large corporations, the legal name of the business is that which is registered with the state government. The name of the business is, in effect, the DBA.
Having decided which business type or form to register (or not register, as the case may be), it’s back to the business of choosing the best possible name for your new business.
Simple originality and ingenuity are two of any successful entrepreneur’s secret weapons. This is what will set you apart from the rest, both in terms of the business as a whole, and its name. But while originality implies something bright and new, you don’t have to reinvent the wheel. Often a fresh, new look at something that is already established in the marketplace will enable a clever entrepreneur to “up the ante”, and take on competitors before they know what’s happening.
So where do you start? First and foremost, with the business; after all there is no point in having an original name that doesn’t relate directly to your new venture.
While you should always avoid embarrassing (if deliberate) spelling errors, sometimes “made up” words make excellent product and business names. If you plan to trademark the name, non-dictionary words often provide the originality that is required.
Make it Sound Good
People like to feel happy and to be amused. In business, they like to feel positivity and trust. If your business name is in any way negative, you’re going to be starting on the wrong foot. Bearing in mind that the name you opt for now should remain the same from Day One, make sure that the name you choose feels good and doesn’t elicit any feelings of antipathy or doubt, or have any other dubious connotations.
If you can’t think of a name that has a positive message or will put a smile on people’s faces, at very least aim for a name that is completely neutral.
It should also literally “sound” good and be easy to pronounce. For this reason abbreviations and initials do not work well in business names. For example, try finding a name that rhymes.
Make it Easy to Remember
It stands to reason that if the name of your business is catchy, and/or very easy to remember, your customers and potential customers won’t have to think twice before calling you or visiting you, be it online or at a real-time premises.
Think of some of the names of businesses created by some of the world’s most successful entrepreneurs: Larry Page’s Google, the late Steve Jobs’ Apple, Richard Branson’s Virgin, Jerry Yang’s Yahoo, and Mark Zuckerberg’s Facebook. They are all short, easy-to-remember and, if you think about it, original too!
While it is generally considered unwise to use your own name or initials as a business name, there are times when it makes perfect sense to, for instance if your business Is promoting a product you have designed. There are many examples in the fashion world, including Ralph Lauren. Another is Dell Computers, the brainchild of 40-something year Michael Dell who is now reputedly worth more than $17-billion.
Once you have a name, design, or have a logo designed. A good logo makes it a lot easier to remember business names.
Before you decided on the type and form of your business, you should have analyzed your target market and identified your probable competitors. From this moment on you’re going to need to keep a close handle on both these factors. If you are not able to get your estimated market share of the business you are launching, chances are your success rate will fall short of your business plan (and yes you DO have to do one if you’re serious about this business).
It is a very rare few who enter the market with a completely new product. Rather, the entrepreneur will enter an existing market and simply have to do things better.
So if you haven’t already done so, go back and analyze not only obvious business strategies of competitors, but also look carefully at their names and logos. Compare them and ask yourself why some are more successful than others.
Ultimately, remember that you don’t want to copy competitors, you want to be different.
Choice and Availability of Names
It’s often a case of first-come first-served when it comes to business names, particularly when it comes to trademark (see next section below). Quite simply, if another business has established a trademark, you cannot use that name – even if it isn’t registered. You also cannot choose a name that could be mistaken for a trademark name. Furthermore you will find that in some states, if another business has already registered a name (regardless of whether it’s trademarked) you won’t be able to use it. Sometimes it is allowed, but only if the two businesses are in different industries. For me, that spells two businesses with names that probably don’t do justice to either of them.
If you are going to operate via the Internet, you will (or perhaps already have) be registering a domain name. Here there is no allowable duplication of names, except of course in terms of the generic top level name (gTLN) including .com, .org, .net. and the plethora of country-code top-level domains. I like this site for finding available domains.
That’s simple enough, but the challenge is make sure that the business name you register and the domain name you register can work together. The ideal for many is to match the two, and branding should follow through on all levels. But trying to match a domain name to a business name can be a nightmare. Here’s where DBA can save the game yet again.
Avoid Trademark Issues
This issue of trademark is two-sided and it can work both for and against you. What a trademark does is to identify products and services that come from a “unique source” and distinguish them from your competitors’ products and services. If you really have a unique product or service then it probably is worth the time (it’s take a couple of years for registration to be completed) and cost (apart from trademark costs, an attorney will have to do the registration for you). But with a mere 300,000-odd registered in the entire USA in 2011, this is clearly not a priority for most small business owners.
Two other factors to consider are that trademark for small US businesses is only valid in the US, so if you’re setting up an Internet business you’ll have limited protection. And if you only have an unregistered mark (you may be waiting for registration) and somebody breaches your trademark, you may only be protected within a specific geographic area.
There are three marks:
™ an unregistered trademark for products (see the Google logo)
℠ an unregistered service trademark
® a registered trademark (see the Yahoo logo)
When you start operating you business, make absolutely certain you aren’t in breach of someone else’s trademark. The penalties can be extremely high.
Ultimately, if you aim to be honest, unique and different, it’s very unlikely you will have any trademark issues. And with a good name behind you, the only way to look is forward.
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