Choosing the right name for your company can be a deciding factor in whether it succeeds or fails in its early days. And once you’re past that first hurdle, having the wrong name when the business is breaking into new territory can also be a big problem when entering international markets. And no, we’re not exaggerating.
Various studies have tracked stocks when they went public. The companies with names that were easy to remember rose more during the IPO, regardless of financial analysts’ predictions. So how vital is it to spend time choosing your business’s name?
We could ask On-Line PLC, a company in the video game market. After more than a decade with a stable share price, one day in 2017 it decided to change its name to “On-line Blockchain PLC”. The result was an immediate rise of almost 500% in its share price. So your company’s name can decide your future in ways that may not make sense to you right now.
Things to bear in mind when choosing your business name
It doesn’t matter whether you expect your business to be big, small, local, national or international. When choosing your company’s name, you should do it so that whenever it’s seen in print, anywhere, it sounds serious and substantial.
On top of that, you never know whether your business will grow into something much bigger, and you have to allow for that.
We often say you never get a second chance to make a first impression, and that doesn’t apply only to people. Unconsciously, the same happens with company names and logos.
In Spanish-speaking countries it’s very common to put your first name and surname in your company name. That isn’t bad in itself; people do it in the United States and elsewhere too. The problem is how it sounds to others.
In other words, seeing Yves Saint Laurent or McDonald’s isn’t the same as seeing Anastasio Ramírez. Don’t ask me why, but it isn’t the same.
Examples of business names
Imagine two brothers, David Martínez and Óscar Martínez. Now think about which company would catch your attention more if you were going to do business with them:
- Hermanos Martínez S.A. (“Martínez Brothers”)
- Grupo Martínez S.A. (“Martínez Group”)
- Daoma S.A.
- Martínez S.A.
According to marketing experts, the first name on the list would be the least appealing compared with the others, if we look only at the trade name.
Another example, with a real estate business: Mr Francisco Campoy decides to open an estate agency right in the city centre.
- Inmobiliaria Paco (“Paco’s Real Estate”, Paco being the familiar form of Francisco)
- Agencia Inmobiliaria Campoy (“Campoy Estate Agency”)
- Inversiones Campoy (“Campoy Investments”)
- Inmocamp
Clearly, even if you had a genuine real estate corporation, anyone who didn’t know your company personally wouldn’t get any sense of scale from a name like “Inmobiliaria Paco”. On the other hand, a 20-square-metre office called “Inversiones Campoy” suggests something more than a small business.
Sometimes the excitement of our first business and our enormous eagerness to win over the nearest market (our own city) lead us to put our nickname in the company name, to make sure people know us and know the company is ours. But in the long run, if your business grows, this kind of trade name is simply a bad idea.
In the Spanish market, consumers take it as a sign of a company’s professionalism and seriousness when its name is “Americanised”. In other words, our brains tend to perceive English-sounding names much more favourably.
Why this happens is easy to show with a simple example. Here are two business names. If you were running a company with 500 employees and millions in turnover, which one would you choose to maintain your IT systems?
- Mantenimiento y Reparaciones Informáticas (“Computer Maintenance and Repairs”)
- Corporations Mycrosistems
Tips for choosing your company’s name
A few things have changed these days when it comes to choosing a name for your business.
Should it be as descriptive as possible? Not any more
While it used to be recommended that your business name describe your product or sector, that rule has lost much of its relevance today.
See also: 7 tips from young entrepreneurs for getting your business idea off to a successful start
The names Amazon, Google, Facebook, Apple…
It’s much more important for your company name to be short, easy to pronounce and, above all, easy to remember. In fact, the name doesn’t even have to make sense at first glance, even if the reason behind it is explained later.
For example, Amazon is easy to pronounce, easy to remember and short. At first glance, nobody can tell what the company does. Even looking at its logo, you wouldn’t know straight away what it sells.
Today we know that Jeff Bezos changed his company’s name to Amazon in reference to the Amazon River, the largest river in the world, and that it also runs from A to Z, a nod to Amazon covering every kind of product.
As for Google, try explaining to ordinary people that Google comes from the word googol, which is basically 10 to the power of 100, or in other words a 1 followed by 100 zeros. Who on earth cares?
How do Americans perceive American company names?
If Google shows how complicated a name can be, Apple shows how simple a trade name can be perceived. An American is just saying “I bought an apple phone.”
Facebook’s name isn’t very glamorous in English either: it’s basically a “book of faces”.
So we shouldn’t always look for the most innovative option, because sometimes the greatest innovation lies in going for the simplest.
Combine words to design your company name
ANC, JPMorgan… Try shortening words from your first name and surnames and putting them together to see how they sound. Initials too. Sometimes you can find a good trade name this way.
You can also try making a list of words that describe your business or industry well and then shortening, mixing and altering them until a combination sounds right.
But as an extra tip, try not to make the combination too forced.
Look at the visual impact of your business name
Thinking of it, or seeing it on a blank sheet of paper, isn’t the same as seeing your name printed on a business card. As far as possible, try to put yourself in the shoes of someone who doesn’t know you at all and has never heard of your company. What impression will they get when they see your company’s name, and even its logo?
Check how your name looks in other languages
Basically, translate your name into other languages to make sure your business name doesn’t mean “shit” in Russian, or have other meanings in other languages.
Mistakes to avoid when choosing a name for your business
Using long and/or confusing trade names
As we said earlier, the shorter and easier to pronounce, the better.
Using diminutives
One reason is “aesthetic”, especially if we use diminutives like “Azulejos Pepito” (“Little Pepe’s Tiles”). Sometimes these diminutives come from the entrepreneur’s nickname or from affection for a young son. Either way, psychologically it makes your company seem less serious.
Using your first name and surname
Here, to begin with, the reason is more practical than anything else: if the company goes bankrupt tomorrow, your name will always be associated with that bankruptcy. Let’s say that if you have to start again from scratch, your name is already involved every time someone searches the internet. That said, bear in mind the other points we’ve covered.
Including a geographical area
This is a very common mistake, and it takes its toll when the company unexpectedly expands. Don’t include a geographical reference in the name, such as “Azulejos Granada” (“Granada Tiles”), because outside Granada it won’t help you compete with other local or national companies.
Using names similar to another company’s
Sometimes this happens through lack of information, and at first it isn’t much of a problem. Problems can come as soon as you start to take off, because if you’re successful it may end in a lawsuit, and then it’s a judge who decides whether you can keep your company name.
Featured image: Alexander Gerst, CC BY-SA 2.0, via Wikimedia Commons.
