During the crazy journey of launching a business, no decision is more agonising than finding the right business name.
In most cases, business owners have a firm grasp of the brand message they want to convey. However, trying to distill that message into a memorable, easy to say and easy to spell name is no easy feat.
On top of branding issues, the name has to be legally available to use – even though it feels like every good name was taken a decade ago.
Throughout the process of helping small businesses get their start and working with incredible small business owners, I have seen many entrepreneurs take thoughtful and effective approaches to naming their business.
If you are starting a new venture this year, here are a few tips to keep in mind as you start to brainstorm and vet potential names.
1. Know your brand promise
Don’t get too bogged down with what your product does. Instead, ask yourself how you want your customers to feel. It’s those feelings that represent your brand promise and create a deep emotional connection with customers.
You can start by creating a mind map of all the concepts related to your business: descriptive words, emotions and experiences you’ve felt or want your customers to feel.
The founders of Wood Ranch BBQ & Grill restaurants spit-balled ideas by writing concepts down on cocktail napkins over beers.
“We ended up with ‘Wood,’ since we grill our core items over a wood fire, and ‘Ranch’ because we wanted the brand to be all-American, approachable and timeless,” said co-founder and co-CEO Eric Anders.
2. Pick something that’s easy to say, spell and remember
Obviously, new customers will need to be able to remember your business name and type it into their search bar correctly.
If your name is overly complex – for example, it incorporates your last name, tricky spellings, abbreviations, numbers, etc. – this can be a problem. GotVMail, a virtual phone solution, changed their name to Grasshopper, to make it easier for potential customers to understand and spell.
“We do radio advertisements, so it’s important that people understand our name right when they hear it,” they wrote.
3. Survey your potential customers
Once you’ve narrowed down potential names to a few options, try them out on your target market. Be sure to get feedback from people other than close family, friends and co-founders who are already familiar with your budding business.
It’s important to learn the impact of a name on people who don’t know anything about your products or service.
Rachael Miller, designer and founder of Go Sports Jewelry, wanted a name that stood out and was easy to remember.
As she was deciding on the right name, she surveyed NFL wives with three different options, asking which name they gravitated towards, which best described her jewelry designs and which name they would remember if they heard it in a loud environment.
Related: How to Name a Business
4. Don’t narrow your focus too much
A common naming mistake is to focus on a name that reflects what your business does now, rather than where you plan to go. Avoid picking names with a specific geographic location or product categories that wouldn’t allow you to expand your product line.
When choosing a name for her freezable lunch bag business, PackIt CEO Melissa Kieling wanted something that could scale with the brand. As Kieling explained, “Our product incorporates a proprietary technology, so we were tempted to use freeze or some other word that suggests cooling. But, my vision is much bigger than cooling.”
5. Make sure the name is available and trademarkable
This may be an obvious point, but before settling on a name, you’ll need to make sure it’s legally available to use, offers a suitable URL and can be trademarked. This process involves three basic steps.
First, check the availability of your proposed name in the state(s) where you’ll be operating to make sure there isn’t already another business with the same name registered there.
To do this, you can contact your state’s secretary of state office (some states offer an online searchable database).
You can also have an online legal filing service handle this for you, but many sites will perform this basic search for free.
If the state name search comes up clear, the next step is to check out the Patent and Trademark Office to see if anyone has an approved trademark or pending application for your proposed name in a similar capacity.
Finally, you should conduct a comprehensive name search – either through an online service or a lawyer – to see if anyone is using your proposed name at the state or county level and didn’t register with the state as an LLC or corporation.
If all your name searches come up clear, you’re ready to move ahead and put your branding efforts into full gear.
From a legal perspective, don’t forget to register your name with the state and apply for a trademark. After all, you’ve most likely invested countless hours finding the right name – you’ll want to make sure it’s yours to use for years to come.
This article was originally posted here on Entrepreneur.com.
Alan Knott-Craig Answers Your Questions On Money And Partners
From starting the right business, to managing business partners and finding your magic number, there is a secret to happiness.
If I get rich will I be happy? — JC Lately
Does money equal happiness? Mostly, yes. Research in the US shows that your happiness is proportionate to your earnings up until you earn $80 000 per annum. Thereafter, incremental income gains have a negligible effect on your happiness.
In other words: More money will make you happy as long as you’re poor. Once you break out of poverty and enter a comfortable middle-class existence, more money will not make you happier.
These are the top three for old folks:
- I wish I’d spent more time with family.
- I wish I’d taken more risks.
- I wish I’d travelled more.
Therein lies the secret to happiness. Spend time with your family. Take risks. Travel.
But first, make money. Don’t do any of the above until you’re making enough money not be stressed about money.
What is the magic number? — Mushti
The magic number is the amount of money you need to not worry about money ever again. If you don’t need toys like Ferraris, yachts and jets, the magic number is R130 million. Here’s the math: R130 million will earn R9,1 million in interest annually (assuming 7% interest). After tax that is R5,46 million.
Assuming you need 50% to maintain a good lifestyle, that leaves approximately R2,7 million for reinvestment, which is enough to keep your capital amount in touch with inflation for 50 years. The balance of R2,7 million (after tax) is for your living costs. In South Africa, R2,7 million will afford you a lifestyle that allows you to send your kids to a great school and university, to travel overseas a couple of times a year, and to live in a comfortable house.
Over time your living costs (and inflation) will eat into your capital amount. After 50 years you should be down to nil, assuming you earn zero other income in that time.
In 50 years, you will probably be dead. If you’re not dead, your kids will be able to support you (because they love you and they have a great university education).
I am the sole director of a company (the others still have full-time jobs and don’t want to be conflicted) and there is pro-rata shareholding based on our initial shareholder loans. However, I am putting in most of the hard work, together with one of the other actuaries. How best do I manage the director/shareholder dynamic? I obviously want to make as much progress as possible but there are times when I need the input from the others (and their responses aren’t always as quick as I would like). — Mike
If you have any perception of unfairness regarding effort/risk vs reward, deal with it NOW! You can’t do so later. The best approach is honesty. Call your partners together. Explain your thinking. Perhaps argue for 25% ‘sweat equity’ for yourself. Everyone dilutes accordingly. Ideally cut a deal whereby you have an option to pay back all their loans, plus interest, within six months, and you get 100% of equity (unless they quit their jobs and join full-time).
Equity dissent must be resolved long before the business makes money, otherwise it will never be resolved.
What do you think of WiFi in taxis?— Ntembeko
It’s a good idea, but not original. Before embarking on a start-up, you should survey the landscape for competitors. Just because there are none doesn’t mean no one has tried your idea.
It just means that everyone that tried has failed. You need to be 100% sure that you have some ‘edge’ that makes you different from everyone who came before you (and failed). Otherwise you will fail. What is your advantage that is different to everyone who came before?
Read ‘Be A Hero’ today
What You Need To Know About The Lean Start-up Model
The Lean Start-up philosophy was developed by Eric Ries, a Silicon Valley-based entrepreneur who also sat on venture capital advisory boards. He published The Lean Startup in 2011, igniting a movement around a new way of doing business.
The model follows key precepts that include:
Taking untested products to market
The fact that too many start-ups begin with an idea for a product that they think people want, spending months (or even years) perfecting that product without ever testing it in the market with prospective customers.
When they fail to reach broad uptake from customers, it’s often because they never spoke to prospective customers and determined whether or not the product was interesting. The earlier you can determine customer feedback, the quicker you can adjust your model to suit market needs.
The ‘build-measure-learn’ feedback loop is a core component of lean start-up methodology
The first step is figuring out the problem that needs to be solved and then developing a minimum viable product (MVP) to begin the process of learning as quickly as possible. Once the MVP is established, a start-up can work on tuning the engine. This will involve measurement and learning and must include actionable metrics that can demonstrate cause and effect.
Utilising an investigative development method called the ‘Five Whys’
This involves asking simple questions to study and solve problems across the business journey. When this process of measuring and learning is done correctly, it will be clear that a company is either moving the drivers of the business model or not. If not, it is a sign that it is time to pivot or make a structural course correction to test a new fundamental hypothesis about the product, strategy and engine of growth.
Lean isn’t only about spending less money
It’s also not only about failing fast and as cheaply as possible. It’s about putting a process in place, and following a methodology around product development that allows the business to course correct.
Progress in manufacturing is measured by the production of high quality goods
The unit of progress for lean start-ups is validated learning. This is a rigorous method for demonstrating progress when an entrepreneur is embedded in the soil of extreme uncertainty. Once entrepreneurs embrace validated learning, the development process can shrink substantially. When you focus on figuring the right thing to build — the thing customers want and will pay for, rather than an idea you think is good — you need not spend months waiting for a product beta launch to change the company’s direction. Instead, entrepreneurs can adapt their plans incrementally, inch by inch, minute by minute.
Start-Up Law: I’m A Start-up Founder. Can I Pay Employees With Shares?
Bulking up employee salaries with equity is a common method to attract, retain and incentivise top talent.
Every early stage start-up company battles with restricted cash flow and not being able to pay market related salaries to their employees. Bulking up employee salaries with equity is a common method to attract, retain and incentivise top talent.
Can I pay salaries with shares?
South African labour laws require that employees be paid certain minimum wages, and “remuneration”, as defined within the Basic Conditions of Employment Amendment Act, either means in ‘money or in kind’. ’In kind’ does not include shares or participation in share incentive schemes, as determined by the Minister of Labour. As such, there is no room for start-ups to completely substitute paying salaries with shares or share options. However, there is no restriction in topping up below market related salaries with equity via an employee share ownership plan (‘ESOP‘).
Employee Share Ownership Plans
There are a variety of ways in which employees can be incentivised, and it will always be important for the start-up founders to consider what goal they wish to achieve by incentivising their employees.
ESOPs can be structured in several ways, for example: employees may be offered direct shareholding in the company, options for the acquisition of shares in the future; or alternatively, a phantom / notional share scheme can be set up.
ESOPs permit employees to share in the company’s success without requiring a start-up business to spend precious cash. In fact, ESOPs can contribute capital to a company where employees need to pay an exercise price for their share options or shares.
The primary disadvantage of ESOPs is the possible dilution of the Founder’s equity. For employees, the main disadvantage of an ESOP compared to cash bonuses or bigger salaries, is the lack of liquidity. If the company does not grow bigger and its shares does not become more valuable, the shares may ultimately prove to be worthless.
Some key features to consider when setting up an ESOP are:
- ELIGIBILITY – who will be allowed to participate? Full time employees? Part-time employees? Advisors?
- POOL SIZE – what percentage of shares will be allocated to incentivise employees?
- RESTRICTIONS – will employees be able to sell their shares immediately?
- VESTING – will there be a minimum period that service employees will have to serve with the start-up to receive the economic benefit of his or her shares?
Employee share ownership plans are great corporate structuring mechanisms for attracting and retaining employees, as well as fostering an understanding of the company ethos and encouraging loyalty and productivity. It is essential when implementing an ESOP that all the tax implications are considered and that the correct structure and legal documentation are in place.
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