Lassoing the right name is tricky,
but can steer your business to success
By Jay MacDonald • Bankrate.com

What's in a business name? A lot more than you might think.

The right name can help secure financing, attract customers, aid expansion and position a company for a more profitable merger or acquisition. From birth to death, few other aspects of a business will steer its course quite as forcefully as its name.

But finding and legally securing the right name in today's crowded markets can also prove expensive. Naming (or "branding") agencies charge $10,000 to $35,000 and up for startups and $100,000-plus to rename midsized and larger companies.

Is it worth the investment for a small business?

That depends on how well you know where you're going and how soon you want to get there.

Naming vs. branding
Not long ago, companies chose a name primarily to establish an identity: Smith's Grocery. That changed in the mid-'80s when emerging high-tech pioneers borrowed the brand-marketing techniques of Procter & Gamble Co., McDonald's and others to elicit an emotional response to their decidedly un-cuddly new product -- the computer.

"What did an apple have to do with a computer?" asks James Dettore, CEO of Brand Institute. "It was purely an arbitrary, personality-driven image that made this whole area of technology more user-friendly."

So today, companies are branded in the same way as toothpastes. The idea is to create a name that prompts consumers to give emotional reactions that will translate into loyalty. Today, branding is most apparent on the Internet (Yahoo! and amazon.com are good examples) but its impact is being felt across the American business landscape. Remember Smith's Grocery? It's now called Sweet Granny's Greens.

The cost
Brand Institute charges $25,000 to $35,000 to create, evaluate and trademark a name for U.S. startups. Dettore says getting the right name is harder than it looks.

"There are a lot of questions. Do they want to, or need to, get into a crowded market vs. creating a category? Differentiation is critical, but will a totally unique name say enough to get the end user to buy their product? What about growth and e-commerce?" he says. "It's bigger than naming; it's where they want to position themselves based on market needs."

Athol Foden, naming director of NameTrade, says the average $10,000 to $15,000 his company charges for the right name quickly pays for itself.

"I like to say, if you're going to spend $100,000 a year on marketing, why not spend 10 percent and get the right name? The publicity from it will probably save you the first $50,000."

The search for the perfect name
Tom Romary knows from experience the value in a company's name. A year ago, he hired on as vice president of marketing for an online sports gear store called Sportsite.com in Redwood City, Calif. What had been considered a real find as a domain name turned out to be a liability as a company name.

"Sportsite.com in a competitive context really held us back," he says. "Even though it was functional, it could have been where you go to get ball scores."

To confirm his hunch, Romary conducted some focus groups. "They could not remember the name of our site five minutes after they saw it. They would say, "Well, it's sports something.' So they would search under sports on a search engine and then we're dead because thousands of results come up."

Enter Idiom, a branding company in San Francisco. Romary and his team whittled a list of 3,000 names down to 10. After searching trademark and domain availability, they settled on Fogdog, an obscure nautical term for a ray of sunlight through the mist.

"We wanted a unique name. We didn't want to have any baggage, any precedent about how people thought about our brand," says Romary. " And because it's the Web, we needed it to be easy to spell."

Business has increased 8 to 10 times for Fogdog Sports, thanks to the new name, advertising built around a dog character and an obvious Web address.

Romary says his experience with Idiom paid off. "They really allow you to name your company," he says. "They just facilitate the process."

The trick of the trademark
Finding the perfect name is only half the battle; registering it is the trick. Foden says a trademark search is really an inexpensive form of business insurance, even if you have no plans to expand beyond the city limits.

"You really have very little protection at the local level," he says. "What if there's a big New York company with that name and they've got a trademark on it? They send a little note to cease and desist and you've got 10 days to do it. If you're a small business, at least then you know who's out there with the same name."

A variety of trademark searches are available on the Internet, from a $35 surface search from companies such as NameProtect.com to $895 for a full common law legal search from American Trademark Co.

The U.S. Patent and Trademark Office registers trademarks in 42 categories. The application cost is $245 per category. The process can take nine to 24 months. Add overseas rights and you're looking at two to five years.

A name is not forever
Even well-established companies can face an identity crisis. Perhaps they're expanding into new markets, introducing new product lines, preparing to offer stock, or have simply outgrown their name.

"We actually prefer to be called in once you've struggled," says Foden. "If you can do it, you don't need us."

Dettore sees a sound name as part of sound business practice: Ignore it at your peril.

"If there are ever tough times again, a lot of these business owners who never did their homework, who never identified their market properly, will be in trouble. The big companies will either buy them or they'll crush them."

Jay MacDonald is a freelance writer based in Florida

-- Posted: Aug. 30, 1999