Your business name should help you build up goodwill for your business among customers, suppliers and employees. If you succeed, it becomes a valuable asset that you can include in your balance sheet, sell or license others to use.
It should be memorable. Long names, or initials, are often hard to remember. Distinctive names are best, though quirky names like Egg or Orange can confuse customers, unless you are prepared to promote them hard to establish the market position you want, or the name suits you because you are a creative business.
Another benefit of distinctive names is that they are easier to protect - for example, by:
- bringing a 'passing off' action in the courts (see question six) against anyone who copies it; or
- registering it as a trademark (see question seven), which gives you significant rights against someone who tries to use your name, or a similar one, for their business.
A name that is just a description of what you do (eg 'the card makers') means people know what you do immediately, and may remember you more easily, but if you decide to change what you do, or expand into a new area, you may have to change your business name, and start building goodwill in the new name all over again.
Many businesses with multiple business names use a distinctive word in all of them, with additional descriptive words for different parts of the business. Some brands are very 'elastic' and can be stretched over many different businesses (like Virgin Records, Virgin Radio, Virgin Direct, Virgin Mobile, etc). Others are less elastic (so Cadbury's is only use for chocolate products such as Cadbury's Crème Egg and Cadbury's Dairy Milk). But if you get it right, you can develop a 'family' of names that provide reassurance to customers, whichever part of the business they are buying from, and whichever products they are buying.
Business names, especially brand names, can be made even more memorable and distinctive by combining them with, or incorporating them into, designs, graphics, logos or straplines.
Someone buying your business will usually want to carry on using the same business name. Choose a name you are happy to relinquish when the time comes. If your business name is your own name, or some other name you will want to carry on using yourself in the future, this can be a problem.
Finally, your name should not be the same as or similar to a name being used by another business, as you could end up in a costly row over who the name belongs to - especially if the other business is in the same industry sector or geographical area as you (see question six).
