How to Choose a Business Name and What to Avoid

Updated: March 4, 2024

Everyone with a pocket full of dreams has to attend to this at some point. The decision to choose a business name is crucial but coming up with a good one is difficult. It is made harder by the sheer amount of businesses started every year. If you are in the US, the stats show that an average of four million businesses are started each year. Chances of coming up with a unique business name are slim to none.

Is it even worth the trouble? Having a good business name is a small investment into the future. You will look back and tap yourself on the shoulder because you saved yourself problems; including legal problems. Let us take a look at the important things to know when selecting your business name.

This is your Brand

We are advocates of a long term mindset when building your business. Think of where you want to be several years from now. For you to get there, you have to be more than just a business. You will have to mean more to your current customers. You will have to be irreplaceable. One factor to ensure you are irreplaceable in your customers’ minds is your branding. Branding begins with the name you choose for your business.

You want recognition from the name you choose. In other words, your assignment is to come up with a catchy business name. A catchy business name inspires the right feeling. You want the market to remember you for starters. If people cannot remember you, then you are working against a headwind. Most of your marketing efforts will amount to little.

The right business name is likable because that also adds to how memorable you are to the market. A dislikable business name could indicate a negative association. The name could be offensive or associated with something your market considers bad.

Look for a Trademark

For as long as the market existed, there has been an ongoing need for businesses to distinguish their products. The term branding arguably has its origins from when livestock owners would use a hot metal to ‘brand’ their livestock so as to mark their ownership. The name you choose for your business becomes the hot metal with which you brand your business. People will associate your business name with your products or services.

The American Marketing Association defines a mark (brand) as a name, term, design, symbol or other feature that identifies one seller’s goods or services from that of another. The term often used is a trademark if you are selling products and a service mark if you are selling a service. It works both ways, if the law protects you when you use a trademark, it equally protects other business people from you using theirs.

The name you are considering for your business should not be similar to another that a competitor is using. Your competitor can take you to court for a name that sounds a lot like the one they use. If you are in the US or wish to operate in the US, you can check the trademark database to confirm if a name you like is already trademarked. The symbol ® shows a registered trademark. If a business has not registered the mark it uses, they will attach the ™ sign. The law protects even unregistered trademarks through the common law.

It Should be Unforgettable

Earlier in the article, I mentioned that you will need a catchy business name. Among other reasons, a catchy business name is memorable. One key element of a memorable name is how easy it is to pronounce it.

As humans, we depend on pattern recognition. There was an experiment done on chess players, both expert level and amateur. The scientists showed each player a chess board for a few seconds with the pieces randomly placed. They were then asked to recreate the positions as they were on an empty board. The second part of the experiment then showed the players a second board which had the pieces in an organized pattern. Organized meaning that in a normal chess game, it is possible for the pattern to occur. The elite chess players were able to reconstruct the chess piece positions from the organized board way better than amateurs could. On the other hand, it turns out that they did not perform any better on the randomly placed board.

What does this tell you? The elite chess players, through years of experience, were able to recognize patterns in an organized chess set better than amateurs could. As a result of their pattern recognition, they were able to reconstruct the set easily. Due to the lack of a pattern in a random set, the elite players were unable to recognize a pattern and fared only marginally better.

With regards to a business name, choosing a random set of syllables will lower the chances of people remembering the name. Of course, a name in one language will seem random to a person who doesn’t speak the language. If the syllables are at least pronounceable, our pattern matching kicks in and we can remember. Simple syllables will carry across geographic or linguistic boundaries. Does Toyota ring a bell?

Another method to create a memorable name is to use compound words. We make compound words by combining two preexisting words. Football is an example taken from the words ‘foot’ and ‘ball’. It is difficult to get unused words so use of compound words saves you from having to scroll the dictionary looking for something. It also gives you room for creativity because combinations give you way more possibilities. You can make some unforgettable names like ‘GoDaddy’. Yes, that name is already taken.

Future Proof Your Name

When you choose a good name, you are future proofing your business from unwanted stress. Parents name their children and the majority of them will retain the names for the rest of their lives, unless you are Ye. Businesses may have to change their names for various reasons. The reasons can range from not doing your due diligence to not future proofing your name. Keep in mind, the longer a business stays with a name, the more you will have to spend to get the public to accept your new name. You will be paying to replace a brand which you have painstakingly built.

One way to future proof your work is to avoid naming your business after the location you serve. It is acceptable when you are a small business and the location name is part of your identity. The customers of a small business also find your name relatable because you identify with their hometown. You will often see universities and sports teams do this. They are not opening up a second franchise that uses the same brand, so naming after their location is an identity mark.

You are, however, sailing on a different boat. You want to grow your business. You envision yourself opening up a second branch or franchise in another location. When you use a name like Kentucky Fried Chicken, what happens when you outgrow Kentucky? Answer: you have to change your name to something like KFC, which is the acronym, but became the official name due to expansion.

Your Domain Name is a must

In the current world we live in, people are going to want to reach you and get information about you. The main way people do this is through the internet. If that is not a good enough reason, check out our article on the importance of technology to your business. If you do not control your online identity, then you place yourself at the mercy of others.

The main ways used to control your online presence are social media and websites. With social media, the accounts you create should have your business name. Social media accounts will often share names so there is no issue. Let me reiterate, just make sure you are not violating anyone’s trademark.

Domain names, unfortunately, are very merciless. There is no sharing of domain names so if the one you want is taken, that is it. If your business name is ‘example’ and another business owns ‘example.com’, what you can do is get a different extension. You could get ‘example.biz’. These options are limited because options such as .org and .net are traditionally used for other reasons other than business. If you take a local extension like .co.uk you represent that you are mainly serving that country with the UK extension. Aim for a .com extension if possible. Check out our article on considerations to make before purchasing a domain name for your business.

Now You Know

We have looked at the important details to consider when choosing a business name. Bear in mind it is a frustrating process. Every time you think you have a winner, you might find that there is a vital criteria it fails to check. Keep checking because you will thank yourself later for doing your due diligence.

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