Choosing a Business Name
Choosing a business name is one of the legal or administrative tasks you will have to complete before you open your doors for business.
Unless you are planning on operating as a sole trader using your own name, you will have to select and register a business name for your business.
In many jurisdictions, carrying on a business without a registered name is a criminal offense.
Choosing a business name will be an important part of defining your business identity and needs to be chosen with care.
Using Your Own Name
It is relatively common for people to use their own names or initials as a business name. This method of naming your business enables your customers and your suppliers to readily identify the owner of the business and may lead to more personal relationships with the people who can have a long term impact on your business.
In Australia, if you are trading under your own name (as a sole trader) you do not need to register a business name but it might be advisable to do so anyway. A registered business name can come in handy when you are trying to open a business bank account, register for an Australian Business Number (ABN) or trying to source debt funding.
There at least one serious limitation to consider if you use your own name though. Businesses which are named for the founder may be difficult to grow or to sell because of the brand association with the founder. It may also be difficult for potential customers to work out just what your products or services are without additional information.
Examples of businesses named for their founder include McDonalds and RM Williams.
Descriptive Business Names
Generic descriptive names may make it easier for potential customers to work out what your business does but may not be all that attractive (i.e. they don’t stand out from the crowd).
Examples of business with descriptive business names include International Business Machines (IBM) and Kentucky Fried Chicken (KFC).
Combined Founder and Descriptive Business Names
To overcome the disadvantages of founder or descriptive business names you can combine the two. This allows you to be identified as the business owner and to describe what your business does all I one name.
Examples of combined business names include Dell Computers and Ford Motor Company.
Brand-able or Cute Business Names
If you want to create a brand around your business name one option is choosing a business name that currently has no recognizable meaning (a nonsense word) or select a descriptive synonym of what your business is or does. For example using Debits & Credits as the name for a bookkeeping service.
Examples of nonsense names that now have a recognizable brand include, Google and Amazon.
Brand-able names do not need to be meaningless, but they are generally short (one or two words) and memorable. The business name I use for my primary online business, Knitting Naturally, is an example of this type of name.
I chose Knitting, because that is what the business is all about. And Naturally, because I prefer to use natural fibres when I am knitting.
Whats Next?
Choosing a business name is not a process that you want to rush through as if you make a mistake or decide later that the name is not appropriate it can be quite expensive to change it.
Once you have a short list of possible business names you will need to check if the names are available in your jurisdiction and whether there are any issues with registered trademarks. A short list is a good idea, just in case the name is already being used by another business or if the name is the same or similar to an existing trademark.
If you get the all clear from your research you can go ahead and register the your chosen name.
