When company names go bad

There’s a whole heap of problems that can scupper a business in its plans to develop and grow: poor sales, an interrupted supply chain, industry price-cutting or new competition, a marketing strategy that didn’t quite go to plan, HR issues, sudden increases in overheads, late payments—the list of potential pitfalls is long, and the cause of many sleepless nights.

These problems are familiar to many, and often easy to spot when they arrive. Less obvious and less visible is the effect a company name can have on the development and success of a business.

When done right, a company’s name can play a powerful, multi-dimensional role:

It helps to establish differentiation from competitors
It can set the right tone for the business
It gives people inside and outside the business something to belong to, and to get behind
It sends out relevant messages to customers and prospects
It can contribute to enhancing the brand value of the company
If a good company name can do so much good, it follows that it can do harm when it’s wrong. Not fluffy, intangible harm; I’m talking about bottom-line, financial harm. Unfortunately, it isn’t necessarily the type of harm you can measure using a calculator, but it’s very real nonetheless.

Below, I’ve listed seven ways the wrong name can harm a business. For obvious reasons, I haven’t named the companies in the examples. Is your name sending the wrong message? Read on to find out.

1. Bad sign-posting

There’s a small media agency that sends me emails every now and then, offering great value advertising space on some of the most-read sites on the web. The agency has an impressive team; they carry out compelling promotions, are good at communicating with customers, and have a really nice website. But their name is pretty much the opposite of what you would expect a company like this to be called. Their name has the word “windows” in it, which is distracting because we already know Windows as a Microsoft product. It also sounds like the name of an internet hosting company, and certainly nothing like a media specialist.

I trip over their name whenever I see it in my inbox, and it’s taken me a couple of years to remember, as I hover over the delete button, that they’re not a spammy hosting provider. Their company name points potential customers in the wrong direction, which has to be bad for business.

2. Pigeon-holing

A manufacturer sells a range of market-leading household products direct to customers across Europe and the US. Using a portmanteau that includes the word “eco,” the company’s name places it clearly in the environmental space—and this is understandable, because its first products led on proven eco credentials.

The products sold fairly well, but very soon the business owners discovered that well over 90% of its buying customers were pretty much unconcerned with environmental issues, and actually bought the products for entirely different reasons.

Since this discovery, all marketing, promotional, and advertising activities have focused on features and benefits that have very little to do with the environment. But they have a company name that works against them by speaking to the wrong people, and setting an inaccurate tone for the products. Over the years, the wrong name (and a fear of changing it) will have lost this business a significant number of potential customers.

3. Thinking small

A frequent example of this is any company that names itself after its place of origin, and there are millions of companies who do this. This location-based naming strategy is OK—though usually rather bland—if a business never plans to expand beyond its immediate locality. But with rare exceptions, a location-based name will only ever sound like a local business. Would a company called “Pittsford Building Supplies” be able to expand? Probably not until it changes its name.

Another common approach is for people to use their own name as their company name. Again, this can work fine—and can be great if the owner has a particularly unusual or distinctive name, only ever intends to work alone—or has a big ego! But anyone taking this eponymous business name route should be pretty sure it will stand the test of time, because it can limit the ability of the business to to attract equal business partners in the future—ultimately harming its growth opportunities.

4. Faking it

You see this trait often, particularly among very small businesses—a company name suggests that it’s something it is not. Some companies use grandiose words in their name to make them appear to be a large corporation, when they’re not. Some use words like “international” or “global” in their name to impress, when the truth is otherwise. Some company names suggest a glamorous location, when the reality is far more humble. At the extreme end, there are cases of companies whose name suggests that they are providers of consumer advice, when they’re are actually a straightforward sales operation (these cases usually end up in front of a judge).

A certain amount of “aspiration” in a business name is OK, but deception is not. There’s a fine line between the two. Anyway, allowing people to form an inaccurate impression by having a name that encourages them to do so is bad for business and never works in the long term. It undermines credibility, and potentially places the business among some very unsavory characters.

5. Odd…and not in a good way

Company names with unexpected spellings, that sound a bit funny or have a general air of oddness can be engaging. We like novelty, at least for a while. But when considering a “left field” naming approach, it’s important to remember that all business names need to live and breathe in the real world.

People need to be able pronounce a company name without feeling embarrassed saying it out loud.

This is the world where we have to type in web and email addresses, or type a name into a search bar. People need to be able pronounce a company name so they can talk to their friends and colleagues about it, without feeling embarrassed saying it out loud.

Names that are awkward to say or spell, are too long, or just too darn odd can create obstacles and hard work for customers. They don’t like that.

6. Copying brand-name giants

We can all name a string of world famous multi-billion dollar success stories, most commonly in the tech sector, that have wild and funky names that sounded strange when we first heard them. And of course, we’ve since gotten used to them. And the reason we’ve grown accustomed to these mad-when-we-first-heard-them names is because they’ve been blasted onto our screens and via media and news coverage for years. In many cases, these giants have also been able to leverage or overcome the weirdness of their name by hurling millions, possibly billions, of their VC investors’ cash at it.

Needless to say, normal companies don’t have the luxury of spending huge sums to convince their audience that they’re a credible, trustworthy business worth taking a look at. Nor will they get broad enough media coverage to normalize their name. Mainstreaming a weird name is creating a challenge you could probably do without.

This doesn’t mean that all small businesses and startups should have boring and predictable names—far from it. But it does mean that going too far down the “quirky” route is a very high risk strategy.

7. Being common

Within in every sector, there’s a lexicon of words and phrases that mean something to the audience. In the tech world, for example, you’ll see countless names that include entirely relevant words like cloud, data, bit, meta, hack, app, feed, and so on. Not only does this make company names a bit bland, but it can make them very hard to find online.

Today, a new business is asking for trouble if it uses common keywords in its name, where not so long ago it was a different story. Getting found in a Google search will be a serious uphill battle if your name is competing head to head with common search terms or organizations with names that use the same words, particularly for a new business with little or no domain authority. When naming a company today, playing it too safe can be a dangerous strategy.

The wrong name?

The material effects of the “wrong name” are not possible to calculate with any accuracy, meaning this type of damage can seem intangible. And because it’s not something you can look up in the column of a spreadsheet, some business owners assume, “Our crummy name doesn’t really matter. After all, our business has survived, hasn’t it?” But it does matter, a lot.

Of course, it’s easier to avoid the mistakes listed above when naming and branding a new business than when re-naming an existing one. But this doesn’t mean that business owners have to live with the problem.

While a company name change needs to be approached with thought, creativity, and planning, it’s nowhere near as difficult or expensive as many think. Some modest short term pain could reap significant rewards when a company bites the bullet and changes its name.

The wrong name can harm a company and hold it back, just as the right name can help it reach its full potential.

What other factors should business owners consider when naming—or re-naming—their businesses? Have you re-named your business, and how did you handle the transition? Tell us in the comments below.