What's in a name? A lot, when it comes to small business success. The right name can make your company the talk of the town. The wrong one can doom it to obscurity and failure. Ideally, your name should convey the expertise, value and uniqueness of the product or service you have developed.
During the initial stages of starting a business, choosing the right name of your company can be a difficult task to say the least. It may surprise you but even the name of your business can trigger a red flag with some lenders and creditors.
Unfortunately, many business owners don’t take this simple step into consideration, especially when it comes to the business credit building process.
Before you pick a business name, follow these three steps:
Step 1: Conduct a Trademark Search
You may come across a great idea for a business name, but first you should make sure that you won’t be infringing upon a prior user’s trademark. The first step is to conduct a trademark search by using the Trademark Electronic Search System (TESS).
This search engine allows you to search the database of the United States Patent and Trademark Office. Once you have completed your search and the results uncover no likelihood of confusion, then you will be ready to proceed.
If you fail to follow this step, it can potentially lead to disaster for your business in many ways. Imagine if you had to recall all of your products because of a demand by a prior trademark user. Not only that, but you can end up paying the other party’s attorney fees and monetary damages, which can get very costly.
If you decide to own a federal trademark, your business will have several advantages, such as:
- Public notice of your claim of ownership of the mark
- A legal presumption of your ownership of the mark and your exclusive right to use the mark nationwide on or in connection with the goods/services listed in the registration
- The ability to bring an action concerning the mark in federal court
- The use of the U.S. registration as a basis to obtain registration in foreign countries
- The ability to record the U.S. registration with the U.S. Customs and Border Protection (CBP) Service to prevent importation of infringing foreign goods
- The right to use the federal registration symbol ®
- Listing in the USPTO online databases
For more trademark information, tools, applications, and documentation visit the U.S. Patent and Trademark Office.
Step 2: Pick a Safe Business Name
One of the common mistakes that can impact your company’s ability in obtaining credit is in the name you choose. Picking the wrong type of business name can automatically label your company as a high risk.
There are certain industries that the business credit reporting agencies classify as risky, so picking a company name in a high risk category can possibly trigger an automatic turndown, higher premium and/or reduced credit limit recommendations for your business.
For example, real estate is considered a very high risk industry, so naming your company John Doe Real Estate Investments would not be the best choice if you plan to apply for financing. Pick a safe name that won’t get your company labeled as a high risk.
Step 3: Pick a Unique Business Name
While the sound and spelling of a business name – as well as the availability of a dotcom – play a key role, don’t let this be the single factor that drives your decision. What makes a good name for a business from a marketing standpoint is usually the opposite of what makes a good name from a legal standpoint.
Even though you may think that choosing a business name that describes your product in the name is much better for marketing purposes, it does give you less protection from other people using it against you. It really depends on what makes the best business sense, but this is something you should definitely cover with both your marketing and legal team. Select a unique business name that is marketable and protects you legally. Before you incorporate, take the time to review these three steps so you can pick a business name that works and benefits you.
Once your decision is made, start building your enthusiasm for the new name immediately. Your name is your first step toward building a strong company identity, one that should last as long as you're in business.