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4 Pitfalls to Avoid When Naming Your New Business

By: Eric Giltner, Senior Area Manager
Grand Forks Area Office - North Dakota District Office

Congratulations! You’ve decided to start your own business. One of the most important decisions you will make is what to call your new business. Entrepreneurs often overlook the importance of selecting a proper name and sometimes end up with one that works against the success of the business. A proper business name should meet three criteria:

  1. the name should identify “what” the business is all about;
  2. it should allow your business to “separate” itself from the competition; and
  3. it should allow for future growth.

Here are some pitfalls to avoid in naming your business:

Stay away from initials.  Don and Rick are starting a construction company specializing in custom cabinetry. “D & R Construction” appeals to them because all of their friends will know that the initials stand for Don and Rick! What they don’t realize is the initials say nothing about the company to the general public, with the exception that the owners have little or no imagination. Look in the phone book. There are several businesses identified by initials. How will a new business stand out in this type of letter clutter? Don may meet a prospective customer at a social setting and tell this person about D & R Construction. Later, when that customer tries to contact Don for an estimate, he or she may not remember the correct initials and will contact a competitor instead. Don and Rick should choose a name reflective of the services offered or of the quality provided, for example: “TrueLine Cabinets”.

Don’t be too informal.  Danny’s Lawncare Service is owned by a thirty-six-year-old man who has fifteen years of experience and employs ten full-time employees. The name may work well for Danny in marketing his services to homeowners, but what happens when he submits a bid for commercial contracts? It is possible the person reviewing and awarding these contracts may dismiss “Danny’s Lawncare Service” from consideration under the assumption that Danny is a sixteen-year-old kid who won’t be able to meet the requirements of a professional services contract.

Be careful with using street names.  The use of “Maple Avenue Antiques” for a business name may be very helpful as long as it remains on Maple Avenue. What happens when the business outgrows its location and needs to move to another location? Now the business owner is forced between continued use of a misleading, but well-known, name or choosing a new name that needs to be re-established with its customer base. Unless you plan on never leaving your present location, keep your business name portable.

Watch out for names that limit growth.  The “Ski Shop” may be a wonderful name for a winter sports retail establishment. What happens when the business owner wishes to expand into other outdoor recreation such as cycling? A new customer looking to buy a bicycle certainly isn’t going to gravitate to the “Ski Shop” to make his or her purchase.

Remember to choose a name that will allow your business to stand out from the competition, will allow customers to quickly identify the products/services offered, and won’t limit future growth. Your business name should work for you and not against you.

Eric GiltnerEric Giltner is a Senior Area Manager for the U.S. Small Business Administration (SBA). In this role, Eric trains and connects entrepreneurs and small business owners with the services they need to confidently start, grow, and expand their businesses. He frequently speaks at small business events across North Dakota and presents online webinars. Eric writes about small business topics for the SBA's North Dakota District Office newsletter, Dakota Business, and often shares business tips Thursday mornings on KNOX radio. As Senior Area Manager, Eric also works with SBA resource partners, chambers, economic developers, and lenders to support entrepreneurship in North Dakota. Prior to joining SBA in 1998, Eric served as assistant to the dean of the UND College of Business and Public Administration. He received his B.S. Degree in Geological Engineering and his Master's Degree in Business Administration from the University of North Dakota. Eric can be reached at