A rose by any other name would smell as sweet. – William Shakespeare
A strong business name identifies your business, tells customers and prospects something meaningful about your brand and helps to differentiate your business from your competition. But what should you do when the name you’ve been using isn’t effective at achieving those goals?
While it’s unwise to change your business name just because you’re in the mood for something new, there are times when a change is in your business’s best interest. Here are four reasons when a new name truly is the best choice, and seven tips to help you pull it off successfully.
1. Trademark issues
Occasionally more than one company has the same name. Or, the names are so similar that they may as well be the same. When this occurs, there’s a good chance that one company will get a cease-and-desist letter requesting that the other stop using that name.
And there’s no surprise there: Your business could lose money if someone else operates under the same name as yours.
This actually happened to Jacob Childrey and his established food spice company. He received a cease-and-desist letter from a much larger competitor. That’s how Childrey came to leverage (my employer) Crowdspring’s global community of 210,000-plus creatives to create a fresh, powerful new name for his company.
Scandal. You are at a big disadvantage too if another business with your name is caught up in a scandal. The resulting reputational blow will affect your business as well! So, it’s important to protect your business name to control your brand’s message and ensure that you’re not sharing your profits with a competitor. (For information on how to properly register and protect your business name, check out “What Small Businesses Need to Know about Trademarks.”)
2. Your name no longer reflects your business
Businesses grow and change over time. Some business names are adaptable enough to survive this growth, some not. If your business has outgrown its name, it may be time to think about renaming.
Nellie Akalp, entrepreneur, author and small-business expert, has written on SmallBizTrends, “It’s only natural for a business to grow, evolve or change direction over the course of its lifetime. The name you hatched in the early days may no longer fit your business’s market, activities or brand personality now.” Questions to ask yourself include:
- Have you recently switched to a new product or service?
- Did your business merge with another?
- Has your business philosophy or mission changed significantly?
If you answered “yes” to any of these, a new name may better reflect your brand’s current identity.
3. Your name is not unique
Your business name needs to stand out. It needs to be unique and support your business’s overall brand identity. Generic names like “Publishing Services” or “Professional Tax Accountants” don’t differentiate you from the competition. And they certainly aren’t memorable.
So, even if you deliver fantastic service, well-meaning customers may get your name wrong when they’re asked for referrals. Or they may not remember it at all. That means your word-of-mouth marketing will suffer. And so will your web marketing. If yours is one of 10 variations of the same generic business name, you will find it nearly impossible for customers to find you on the web. You don’t want them to sift through a full page of search results to find just the right “ABC Plumbing.”
Not to mention that no one really wants to do business with a generic, lackluster company.
Your business, your brand and your customers will all benefit if you switch to a more unique name that really embodies your brand.
4. Your name is confusing or hard to spell
If your business name is confusing or hard to spell, customers may be unable to find you. It’s that simple. A business name that doesn’t make sense and confuses consumers won’t be remembered.
In fact, there are aspects of brain science to consider here: Mariano Sigman, founder of the Integrative Neuroscience Laboratory of UBA, has written, “A memory is a network of connected elements.” The human brain stores and accesses memories based on associations between two or more pieces of information.
So, if your business name is confusing or unrelated to your business, chances are that consumers’ brains won’t form the necessary connections to see your business name and your business as linked. And, if the name is hard to spell, they may end up finding another business and sticking with it.
How to rename your business
If it’s time to rename your business, you’ll want to be careful to get things right this time around. You’ll also want to be realistic: Changing your name requires thought and work, not just on your part, but that of your customers. They’ve gotten to know your old brand; now, they’re being asked to unlearn all of that and start over.
This time round, then, follow these tips to name or rename your business to ensure that your new name serves your business well for the long run. For a longer, more detailed version, also be sure to read “10 Tips for Naming Your Startup or Small Business” – both are from our company.
Start with your brand. Your business name should be an extension and representation of your brand essence. So, start by thinking about your brand:
- What does your business do?
- How is your business different from your competition?
- What is your brand’s personality? (Quirky, Solemn, Formal, Playful, Aggressive, Warm)
- What is your unique value proposition?
Take your time. You knew your old brand, so you may be tempted to blow through this process. Don’t. Once you’ve defined your new brand, brainstorm names that support the most important elements. If a name doesn’t relate to your brand in a meaningful way, cut it from the list.
Make it easy to pronounce and spell. Hopefully, this is self-explanatory. In the age of Google and the internet of things, it’s vital that your business be easy to find online.
Margaret Wolfson, founder and chief creative officer of branding/naming agency River + Wolf, pointed out that “a visible digital presence is absolutely critical to the success of any business. You want people to be able to search for and find you with little effort.”
So, don’t choose a name that makes it hard to find you, or is something even a Rhodes scholar can’t spell.
Avoid too narrow and too wide – aim for the Goldilocks zone. Choose a name that is unique, but flexible enough to allow your business room to grow. Review prospective names to ensure you avoid names that are:
- linked to specific technologies likely to become outdated (remember Radio Shack?)
- have a focus so narrow that they preclude future evolution (i.e., “Just Cabinets”)
- contain geographical references that may make your business irrelevant in a broader market
- so broad or generic without personality that they don’t tell consumers anything about your brand
Wolfson noted that a name should be able to embrace eventual product extensions. A notable example is the name change Steve Jobs made from “Apple Computer” to “Apple.” This gave the company room to grow into not-yet-imagined watches, iPads and iPhones.
Don’t forget to differentiate. Do you know who your competitors are? It’s vital that your new business name help your brand stand out from them. So, get to know who they are. Then choose a name that can’t be confused with theirs.
Otherwise, you’ll be back at this renaming rodeo again before you know it.
Get your logistical ducks in a row. Renaming your business isn’t just a creative branding endeavor — it’s also a practical one. Here are the logistical and legal chores you’ll need to complete:
- Ensure the name is available to trademark (Check the Trademark Electronic Search System [TESS] on the USPTO website).
- Check to see if an appropriate domain name is available. I recommend searching here.
- Register the new name with your state and/or the Federal Trademark Commission. You can read up on the basics of trademarking here and research the requirements for your state here.
- Update or amend any legal documents to reflect your new name.
- Notify the IRS of your new name.
For a more in-depth look at all of the practical steps to fully updating your business name, check out this article.
Remember to tell your story. Renaming your business isn’t ever just renaming – it’s also rebranding. And part of a successful rebranding process is figuring out the authentic brand story you want your audience to associate with your business.
Since your business name is a central element of your brand, it’s essential that you figure out how your new name relates to that brand story. Alina Wheeler’s recently updated book Designing Brand Identity addressed this issue, pointing out that names are powerful tools, but they don’t tell the whole story. A name change alone – that neglects to consider all brand communications – could be seen as superficial.
Whether you opt for a social media campaign, an email series to existing customers, a television or radio ad, make sure your customers can see and understand the new you.
Update all branding elements. Sharing your brand story is an important piece of the renaming/rebranding process. To make it stick, you’ll need to update all of your visual branding elements. This includes updating your business logo, business cards and stationery, your website and any other visual collateral like data sheets, or marketing collateral.
As Wheeler recommends that you:
- Consider how new taglines, design, communications and other context-building tools should work with the new name to build a rich new story that you can own.
- Think holistically. Whenever you rename a business, make sure that name is part of a complete, authentic brand.
- Recognise that every aspect of your brand will be impacted from start to finish. Make sure to complete the transformation your name change will start throughout your brand.
Changing your business name is a hassle. It can be tough on your business to rebuild relationships after a change of that magnitude. So, if you can avoid it, don’t do it. But, if you find yourself facing a cease-and-desist order or running a business that just doesn’t match up with the name it’s operating under, you may have to.
When you realise that a name change is in your future, gird your loins and make sure to get it right this time around.
This article was originally posted here on Entrepreneur.com.
Why Failing Is A Necessity Proven To Guarantee Success
We should always have this at the back of our minds whenever we have that nudge to give up on our dreams.
There comes a time, especially after a terrible defeat, when we feel like giving up or even quitting. The defeat clouds our minds and make us forget completely what victory feels like. We forget the successes and judge ourselves solely on the defeats. This feeling isn’t unique to a single individual as even the most successful businessmen, inventors, politicians, world leaders have experienced failures at different points in their lives.
We all love success stories. It’s a matter of fact that behind every success story is a large amount of failed attempts. The notion of overnight success is a myth. It took the Wright brothers between four and seven years of scientific experimentation and several failed attempts before their maiden flight covering a distance of 852 feet which lasted a mere 59 seconds was achieved.
History is replete with instances of individuals who were written off after a terrible fall from grace. These individuals, against all odds, didn’t give up.
Tiger Woods, for example, has for the most part of his adult life being in the public eyes. That’s why when he went to his very public divorce, tales of womanising, dabbling with prescription drugs. Also plagued by injuries, his golf was seriously failing and in danger of being a “has been,” analysts advised he should just retire. It was obvious Tiger had a different plan up his claws by winning his first PGA tournament in five years.
His recent resurgence in form is testament to the fact that no one has the stop button to our life or life’s dreams and ambition. No one but you. It’s only when we stop innovating and trying that we’ve failed. Having lost a business deal that had the chance to change our lives positively forever isn’t the end of the world. Hence we need to reinvent and innovate.
If achieving success was easy, the vast majority of people would be successful. We have to put in the work and our skill to be able to achieve success because the most worthwhile things don’t come easy.
Defeats, if seen from a positive perspective, bring out the best in us. Victories don’t. Victories swell our egos, fill us with the air of invisibility, and this is dangerous. Hence we need a large dose of failures and defeats to bring us down to earth, to make us learn and better appreciate success the moment we’re able to achieve it.
What then do we do when we experience a poor run of defeats that make us doubt our abilities. Being fixated on the defeats for one, isn’t the solution. It has the tendency of making us forget what it felt like to win and totally derail us from our set goals. This, in itself, is a problem as it may lead to a state of unhappiness.
The bad results we might have experienced isn’t an indication of our inabilities, it’s an opportunity for us to look at the venture from a different perspective and take necessary action to improve or try a different approach towards achieving our aim.
Defeats can be depressing when we have dependents who rely on us for guidance and in some cases sustenance. Dependents could be in the form of a spouse, children, wards, parents, even staff. The pressure can be enough reason for some to give up and settle for the safer option.
With the decision to settle comes the likelihood of regret which may be more depressing than the expectations of dependents. Fortune they say favours the brave and nothing worthwhile was ever achieved without the possibility of failure.
Why You Need Smart Legal Foundations For Your Start-up
The legal background to a start-up might not be the most exciting area for an entrepreneur, but it’s your foundation for growth. Are you aware of everything you need to have in place?
One of the best parts of what we do is helping start-ups — the right legal foundations can mean the difference between a start-up that’s geared for scale, and one that needs to retroactively put agreements, checks and balances in place. If you’re aiming for growth, you want to get these foundations right from the get-go.
When Benji Coetzee launched EmptyTrips, a hot up-and-coming start-up 16 months ago, Legal Legends was on the ground floor with her. Although your start-up trajectory may not be identical to that of EmptyTrips, many of the foundational principles canvassed in this article will apply at some point in the lifecycle of your business. They highlight what you should be thinking of from the word go.
Laying the right legal foundation
By the time we were introduced to EmptyTrips, they had already registered their entity as a company and had started to prepare for their first beta public launch in April 2017. When our dealings with the start-up began, the business had already enjoyed a quick and accelerated cycle.
As with all start-ups, the founders had a clear vision and objectives. Unlike too many start-ups however, Benji understood how important the right legal foundations would be, particularly as the business matured and required different support structures.
The following three actions are a good example of the legal foundations all businesses should consider, particularly if growth is a part of the founder’s vision:
1. Why you need trademark protection
Given that EmptyTrips is a digital solution, with limited physical assets, protecting intellectual property as ‘soft’ assets was critical to its differentiation and valuation given the recognition of brand value over time.
At first, we set out to ensure that EmptyTrips’ marketing materials and properties, such as company name, slogan, and product names were protected sufficiently from use by others. This was done by filing for various trademark registrations.
A trademark is a sign or symbol that is unique to your business, and which distinguishes it from other businesses. The most common forms of trademarks are business names, product names, logos and slogans.
By registering a trademark you are granted exclusivity over the use of the name, slogan or logo, and may prevent others from using similar names, slogans or logos in their business in the future.
When it came to EmptyTrips, they had already filed a trademark for their business name, so we focused on protecting the names of the different service offerings on the business’s platform as the solution evolved and pivoted. These included Trip Exchange; Freight Open Exchange; SureFox and RailFox. As the business grows and product lines are added, we will continue to update this list.
2. The importance of website legal documents
EmptyTrips is predominately an online marketplace solution to enterprises. It is a digital transport brokering agency that has been developed to source, match and market available transport capacity (empty space on trucks, trains, vessels and so on) to commercial freight with on-demand supporting financial products (insurance etc).
Each company’s Terms of Service will be unique to that business, market and customers, but privacy policies are universally required by law.
3. The legal frame work around outside investment
Like many high-growth starts-ups, Benji and her team reached a point where outside investment was needed. This is an area where your legal partner is key. Apart from attending to various due diligence meetings and ensuring proper governance controls, we were tasked with ensuring that the contracts for external investment were prepared in a manner that sufficiently protected the interests of EmptyTrips and its founding members.
It’s common during a seed or series A round of funding for an investor to present the start-up with a term sheet detailing the nature or basis of the intention and extent of their investment, as well as all the terms relating to the governance of the company that they would like to put in place.
In this case, the institutional investor presented EmptyTrips with a term sheet that detailed the monetary investment that the investor would provide over a number of years, the monthly draw-downs of the investment that EmptyTrips would be entitled to, the number of shares that the investor would be issued for their investment, as well as the manner in which the governance of the company would be changed in order to protect their investment.
Often, and this applied to EmptyTrips, the terms contained in the term sheet require a new shareholders’ agreement and/or memorandum of incorporation in order to protect the interests of the minority shareholder (the investor).
A shareholders’ agreement governs the relationship between the shareholders of the company and their ability to administer the company.
A memorandum of incorporation governs the relationship between directors, shareholders, prescribed officers and the company. A standard memorandum of incorporation is issued when a company is registered, but it will often need to be amended at a later stage if, for example, measures to protect the minority shareholders are introduced.
A memorandum of incorporation can regulate the same aspects as a shareholders’ agreement, however, the main difference is that it is a public document available for inspection by anyone, whilst a shareholders’ agreement is a private document.
In addition, if there is any conflict between a shareholders’ agreement and a memorandum of incorporation, the shareholders’ agreement will not apply and will be voided to the extent of its inconsistency. This often means, as was the case with EmptyTrips, that certain aspects of the shareholders’ agreement that provided for protection of the investor required a redraft of the memorandum of incorporation so that the two documents were aligned.
A shareholders’ agreement might not be enforceable until a memorandum of incorporation has been aligned with it.
Read next: 5 Lessons From The Legal Legends On Pivoting
7 Factors That Influence Start-up Valuations
Figuring the valuation on a company that isn’t making money is subjective but not arbitrary.
Every startup founder dreams of launching the next Airbnb, SpaceX or Uber. The glamour of these $1 billion+ valued start-ups motivates countless founders to chase after that coveted “unicorn” status with their own valuations. However, the obvious question few can answer is, “How exactly is a start-up valued?”
Valuing a publicly traded company is very straightforward. Its market capitalisation (or market cap) is simply the number of shares outstanding multiplied by current share price. The share price itself depends on known strengths of the company and market forces, and is therefore, seldom way off the mark.
However, the value of a (rarely profit-making) start-up is not at all easy to calculate. In fact, it is at best, an estimate. In layperson language, you could take it to be the sum total of all the resources, intellectual capital, technology, brand value and financial assets that the start-up brings to the table.
Very often, start-ups’ valuations far exceed the sum of their parts, and there’s no universally accepted formula that you can use. VCs, for example, start with the amount they want to exit with and go on to factor in the expected ROI, the amount they invest, the stockholding percentages they can negotiate with the founders to arrive at what’s called the “pre-money valuation.”
That’s just one method, though. There are a ton of widely used methods to arrive at a start-up’s pre-money valuation.
That brings us to the next logical question for founders – “What’s pre-money valuation and why should I care?”
Pre-money valuation is essentially how you value your business. It is the value you’ll quote to a potential venture capitalist or other funding source to get funding for your business. The higher (and more accurate) your valuation, the better is your capacity to attract funding.
Unfortunately, research from CB Insights shows that the chances of the average start-up hitting a billion dollars in valuation is less than one percent. So what, you ask? Even if your start-up doesn’t become the next unicorn in the Start-ups Hall of Fame, there’s no stopping you from getting a strong valuation from your investors.
All you need to do is mind these seven things before your next pitch to a potential investor.
1. Paying customers who actually use the product
Be it a search engine, a social network or even a dating app, every user loves a free-to-use service. However, most investors aren’t so thrilled about freebies. Not a single one of the top five US startups is a free-to-use service. Each one has paying customers.
Pinterest, which is a free-to-use social media network, comes in at number seven, but that too has its own clear revenue model. Even though the platform is free for members to use, it has customers who pay good money to advertise their products to Pinterest’s members, thus ensuring a steady revenue model.
No matter how potentially world-changing your idea might be, you need customers who pick up the tab for the work that you do. That’s the first thing that draws in discerning investors.
2. Traction: Where are you going and how fast are you getting there?
How long has it been since you founded your start-up? How fast have you been growing relative to your competition? Where does the company seem to be headed in the next 12 to 24 months?
These are all valid questions investors expect answers for when they evaluate a start-up. Am ideal candidate for investment is a fast-growing start-up in the initial stages of its lifecycle with a growth curve waiting to happen.
Some start-ups to hit a billion-dollar valuation remarkably fast. Scooter start-up Bird hit the $1 billion mark 1.25 years after being founded; its valuation grew by mind boggling numbers in a matter of months. Valued at $400 million in March 2018, it nearly tripled in valuation in under three months!
3. Profitability: Show me the money
Anyone can show a lot of revenue by burning through a ton of funding. Discounts, sales and freebies are easy ways to reel in the buyers and grow your revenues.
However, simply focusing on revenues with nary a thought about margins, profitability or cash flows is a shortcut to start-up disaster, as many failed ecommerce businesses have repeatedly demonstrated.
Africa’s first unicorn startup Jumia showed us that it’s possible to focus on ROI and profitability even in an intensely revenue-oriented industry like ecommerce.
Instead of focusing on just conversion optimisation, Jumia targeted revenue optimisation through a strategy of aggressive retargeting ads. The results were stupendous. From a 57 percent ROAS (Return On Ad Spend) in Egypt to 120 percent in Nigeria, Jumia’s is the largest ecommerce player in all of Africa.
4. Brand value
As a new entity, consumers first need to be aware of a start-up to use its products or services. Brand awareness and recall are critical to the success of any start-up. However, not all brand value comes from spending big marketing dollars. A lot of it can come from word of mouth, PR and other sources.
SpaceX, currently valued between $20 and $25 billion, has outpaced revenue growth year on year.
It’s true that SpaceX has pushed new boundaries in terms of low cost satellite launches, giving established players a run for their money. But the outsized valuation the company enjoys is in no small part to the halo effect the SpaceX brand enjoys from its founder Elon Musk’s personality cult.
5. Frequency of capital infusion
Consumers are not the only people with a fear of missing out (FOMO). When investors see a startup that’s received funding multiple times in the past, their interest is sparked.
Clearly the start-up’s earlier investors had faith that it would do well; letting a chance to invest in it go by might be a missed opportunity. And that’s how money follows money in the startup world.
While the amount of funds raised by a startup can be a factor of its founders’ ability to pitch and close a deal, a start-up’s past funding is often the prime motivator for new funding to come in.
Ask any founder – it’s toughest to get early investors to believe in your vision and offer seed capital. Once the company has started off and proved itself, subsequent rounds come in on the basis of previous funding rounds and buzz about the company in the investor community.
6. Competition and maturity of market
First mover advantage may sound fabulous to a copycat business but it can be terrifying to the start-up taking those first steps. When companies enter a new market or develop a market through a novel business concept, founders have two tasks ahead of them. First convince investors and then convince the consumer that their business idea is fabulous.
On the flipside, entering a mature market that’s crowded with established players means a start-up is another me-too and its potential for growth will be limited. Funding will reflect this harsh reality.
However, if you’re a disruptor like Warby Parker, you have nothing to worry about.
Warby Parker pulled off three compelling feats with consummate ease. Not only did it create the very first ecommerce business with a vertically integrated supply chain, it also dared to carve a niche for itself in the eyewear market that was monopolised by Italian giant Luxottica.
Better still, Warby Parker even managed to raise $215 million at a valuation of $1.2 billion in just five years.
7. Understanding of business model
Finally, the amount of funds you raise and the strength of your valuation, boils down to the business you are in and how strong a grip you have on making it work. Hindsight is always 20/20, it’s taking a sound decision in the moment that makes all the difference.
Take Facebook for example. In its original avatar, Mark Zuckerberg and his co-founders spent considerable amounts of time and effort on getting advertisers for their site.
Thankfully, Facebook did not become yet another publisher site for one-size-fits-all advertising. Instead, Facebook eventually realised that the company’s real value lay in their rich user data and gigantic user base that they monetised later to spectacular results.
No matter how big or small your business. As long as you know the mantra that makes your project sing, you can count on investors jumping in and joining the chorus.
This article was originally posted here on Entrepreneur.com.
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