How important is the name of a business? Should the name of a business reflect what the business does or is it better to come up with something catchy and easy to remember? -- Randy P.
What’s in a name? When it comes to your business, Randy, a lot more than you might think.
In fact, deciding on a business name is one of the most important decisions you will ever make.
The right business name can help you rise above the crowd while the wrong business name can
leave you trampled in the rush. With the economy in a slump and competition on the rise, now
more than ever it is important that you put considerable thought into coming up with the perfect
name for your business.
Unfortunately, this is a task that is easier said than done. It seems like all the good business
names are either married or… no wait, that’s a different subject, but the analogy holds true. We
live in an age when a business called “The Body Shop” might repair wrecked cars or sell skintight
jeans to teenagers, so before you send your letterhead to the printer, consider the following
points to help you select the business name that’s right for you.
The first thing you should do is conduct a little research to determine if the name is already in
use by someone else. You would be surprised at how many entrepreneurs forget to research this
point and open a business with a name that is already in use. Check with the county clerk and
the secretary of state to make sure the name isn’t already licensed for use or incorporated with
the state. Also check with the U.S. Patent and Trademark office to see if the name is already
trademarked, i.e., owned, by someone else. Using another company’s trademarked name
exposes you to legal action by the trademark owner. Even if your name is just similar to the
trademarked name, you may find yourself in court defending your right to use the name. And
odds are it’s a battle you will lose.
If the name you choose is not in use, you should immediately reserve the name with the
secretary of state (if you plan on incorporating) and apply for a trademark to ensure your legal
ownership. If you do not trademark the name someone can come along later and attempt to steal
the name out from under you. Imagine spending years building up your business only to have
some upstart trademark the name and engage you in a legal battle over rightful ownership. This
is one fight you don’t need, especially when the hassle could have been easily avoided with a few
bucks and a few forms.
Another important thing to consider is the domain name for your business. The domain name
is the website address a customer will use to find you on the Web. Is the domain name for your
business name available? If not, is there a domain similar to the business name you’re
considering?
You will undoubtedly discover that securing a suitable domain name is actually harder than
choosing a business name. Most logical domain names are already reserved, but you might get
lucky. Keep in mind that domain names should be short and descriptive, and preferably have the
.com or .net extension. You can use other extensions (I’ve even used the “.to” extension on
occasion) if necessary, just keep in mind that you will need to put forth a little extra marketing
effort to promote the website address as people typically assume a .com extension as the norm.
Whatever you do, don’t use a domain name that is a confusing amalgam of letters and
numbers that is hard to remember and even harder for your customer to type in.
One good way to approach the task of naming a business is to do so from your customer’s
point of view. Your business name should clearly define your offering and communicate your
message to customers. Put yourself in your customer’s shoes for a moment. If you were looking
for a business that provides your product or service, what would you expect that business to be
called? If you were in the market for computer parts, for example, wouldn’t you look for a
business that has “computer parts” reflected in the business name? Jim’s Computer Parts may
not sound as snazzy as Jim’s Electronics Emporium, but snazzy doesn’t pay the bills. Happy
customers who quickly identify you as the source of their purchase do.
The name of your business can also spark subconscious reactions in a customer that may
drive them to you or drive them away. Words like quality, complete, executive, best, low-cost,
and on time often spark positive reactions in the mind of the consumer. Words like cheap,
discount, and used tend to create negative emotions. You’ll notice that no one claims to sell used
cars anymore, but the dealer lots are loaded with vehicles that are “previously owned.”
Finally, let’s talk about things to avoid. Experts agree that you should avoid using generic
terms like enterprise, corporation, partners, and unlimited as part of your everyday business
name. These terms are fine for the legal business entity name, but are often too unclear for
everyday use. Can you tell me what any of these companies do: ABC Corporation, Big Dog
Enterprises, M&B Partners, and Discounts Unlimited sell? I didn’t think so.
Also avoid abstract names like Yahoo, Google, Monster and Flip Dog (I am not going to list
the names of the numerous local high tech firms that have bucked this rule :o). Abstract names
will require a subtitle to explain what the business does or an expensive marketing campaign that
brands the name into the minds of consumers. Unless you have deep pockets, I suggest you go
with a name that describes your business at first glance and leave abstraction to the likes of
Cher.
Finally, you should avoid hokey names, unless of course, you are starting a hokey business.
Crazy Dave’s Stereo Shop is a great name if the business is really run by Crazy Dave and his
personality is exploited in the marketing of the business. However, if you want to be taken
serious, then give your business a serious name.
Would you go to Crazy Dave’s House of Dentistry?
Neither would I.
Starting Your Business By The Book
I often get questions about the legalities of starting a business. I thought I would address a
few of the more common legal issues most new businesses face. But first, let’s get the
mandatory legal disclaimer out of the way: the advice dispensed by this columnist is probably no
better or worse than the advice dispensed by other columnists. Do not take the following advice
as gospel or bet the future of your business on any advice given herein by said columnist.
Agreed? Good, let’s proceed.
To begin, here’s the best legal advice I can give you as a new business person: find yourself
a good lawyer and make him or her your very best friend. Granted, your new best friend will
charge you an hourly fee for chatting on the phone or talking business over lunch, but you’ll find it
to be money well spent. A good attorney can save you far more than the cost of his services. I
rarely make any decision that has the potential to impact my business without first consulting my
attorney.
You can locate an attorney through legal referral services or just by opening the phone book,
but the best way to find a really good attorney is to ask other business owners for references.
You want an attorney who specializes in business matters. A few of the things you may need
legal help with are: legal business formation, articles of incorporation, trademarks and copyrights,
investment documents, employee policies, etc. You may find that a single attorney can’t meet all
your needs, but if you use a larger firm they will have attorneys on staff that can provide the
specialized services you require.
Now, let's take a brief look at a few questions I’ve received regarding the legalities of starting
a new business.
What's a DBA?
"DBA" stands for "doing business as." A DBA is another name that you use in the operation
of your business other than the legal name. For example, "Jones, Inc." might be the legal
corporate name of your business, but you might use "Bob Jones Landscaping" as the everyday
business name. In this case, you would see the business described in legal context as "Jones,
Inc. Doing Business As Bob Jones Landscaping."
Here’s an example of using a DBA to launch a new venture within an existing business. A
reader asked: "My wife incorporated a multimedia business three years ago, and I am starting a
voice-over business. Is it more beneficial for me to open as a sole proprietorship or to operate
within her multimedia business?"
My answer was that he should open his company as a division of his wife's business,
operating as a DBA. Even though he is using his own business name (the DBA), technically his
wife's corporation is launching the service and therefore will give him some liability protection.
Doing so would also help him save on start-up costs (such as having to pay for a separate
incorporation). It's relatively simple to keep a separate set of books, and when the new business
takes off, he can spin it off into a separate entity.
Will a corporation protect me from liability?
It can, if handled correctly. You may have heard about the “corporate veil,” which means that
you can't be sued personally for anything that happens in the corporation and your personal
assets can't be attacked by creditors or a lawsuit on the corporation. But in order to have this
protection, you must act like a corporation. This means conducting board meetings, taking notes
and publishing minutes in your corporate book. In addition, be sure to have a separate corporate
checking account and, if you need them, corporate credit cards. Don't use corporate money for
personal purchases, and vice versa (unless you file an expense report). Many people think they
don't need to go to all this trouble if there is just one or two people in the company, but in order to
be treated like a corporation, you must act like one. Your attorney can give you more details.
How do I register my company name?
To register your company name simply contact the office of the Secretary of State. This is
easily done by phone. The registrar will tell you if the name you have in mind is available as a
corporate name and will reserve the name for you if it is available. You will be sent a form to
complete and submit with a nominal fee. For more information you can also visit the Secretary of
State’s website.
Do I need a business license?
Nearly every business will require a county or city license. Luckily, such licenses are
relatively easy to obtain and are not expensive. For local licensing requirements, contact your
city or county government offices.
Some businesses might also require a state license. For example, hair stylists, contractors
and most businesses serving food fall under the purview of the state licensing board. Each state
has an agency that deals with these types of businesses. Contact your local government offices
to see if your particular business requires a state license.
Some businesses will even require federal licensing. Examples of such businesses would be
those that provide investment advice or that deal with firearms. Federal licensing is typically
required for businesses that are highly regulated by the government.
I operate my business out of my home. Do I still need a license?
Operating a business out of your home does not get you off the hook when it comes to
licensing. You should check local zoning requirements and property covenants. You can find
this information at the court house or by calling your local license department. Home businesses
are also subject to zoning laws that regulate how property can be used and may restrict various
activities.
This is just a sampling of the legal issues that must be addressed by every new business
owner. To learn more, take your favorite lawyer to lunch. Just be prepared to pick up the tab.
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