Reasons You Might Consider a Business Name Change
1.) The name of your business doesn’t properly reflect your brand. Your brand is essentially the personality of your business, and should embody the qualities you want customers to associate with your company. Your brand will be unique to your own business and industry. For example, a hair salon will be branded differently than a lawyer’s office. A hair salon’s brand may attempt to communicate concepts like “creativity” or “luxury”, while a law firm may distinguish their brand by conveying “success” or “trustworthiness”. The problem is though, that when you first start a business, it can be challenging to know how your brand will change over time. It’s possible to find out down the road that the name you’re using isn’t quite on-point with your business’s identity.
2.) The name of your business isn’t unique enough. Maybe your business is commonly mistaken for other similarly-named businesses, or perhaps it’s just too generic and doesn’t stand out enough. In some cases, a name that’s too similar to another business’s name could even open you up to lawsuits or cause customers to think you’re being misleading. Getting input from your customers, investors, partners, and employees after a few years in business can give you an entirely different perspective on the name you’re using. Changing the name of your business to something more recognizable and distinct could potentially give you a competitive edge over other businesses.
3.) The name of your business no longer reflects your products or services. A huge part of being a business owner is being able to identify what is successful about your business and what is potentially holding it back. By evaluating your business’s successes and failures, and being open to change, you may find that your business has pivoted since you first started out. If your business’s core offerings have changed, you may need to update your business name to reflect that. For example, if you opened “The Sandwich Café”, specializing in gourmet sandwiches and coffee, but later decided to cut out food from the menu entirely, you would probably want to reevaluate your business name.
4.) Your customer base has changed. If your business started out serving a niche group of customers, but you either now want to reach additional demographics, or find that you’re organically attracting a different kind of customer than you first envisioned, a name change could be necessary. For example, if you initially open up a store called “Bath Bombs for Stay at Home Moms”, you may find yourself losing out on a large potential audience – such as working moms, women without children, men, grandmothers, or anyone else that might be looking to purchase a bath bomb. In this type of situation, rebranding under a new name could give your business an opportunity to reach additional, relevant customers.
5.) Your business has moved. If you’ve moved your business to a different city or state, there’s a possibility that the original name will no longer work. This can be especially true if your original location is present in the name of your business (like “Fall River Fold & Dry” or “Bristol’s Best Auto Repair”), or if the name of your business includes a phrase or nickname relevant to a location you’re no longer in.
Potential Drawbacks of Changing Your Business Name
• Changing the name of your business can be difficult and time consuming. In most cases, changing the name of your business will involve much more than just changing the sign out front. You likely will need to update business cards, labels and packaging, online presence and more. It might even involve paying a graphic designer to create an entirely updated logo and branding for you.
• Your employees, customers, or the general public may not like the new name. Unfortunately, not all business name changes catch on the way a business owner expects. The truth is that it’s often difficult to anticipate how people will respond to a new business name, even if you invest time and resources into market research beforehand.
• It could confuse people. Another factor to seriously consider is that a business name change could confuse even your most loyal customers. One way around this is to communicate your rebranding plans early and often. However, you still could end up losing customers who didn’t get the message or who don’t understand that your old name and new name both represent the same company. Many times people assume a name change of a business means you have sold to new ownership or management.
• You could regret it. If you change the name of your business and later realize it was a mistake, it can be difficult or even impossible to resume business operations under your previous name. Not only could you lose thousands of dollars with an unsuccessful name change, but it could be difficult to recover the reputation and brand awareness you built up under your original name.
Process Involved with a Business Name Change
If you ultimately decide that a name change makes sense for your business, you should familiarize yourself with all of the necessary steps.
• Before you get too invested in a specific new business name, make a list of possibilities and check each one with the United States Patent and Trademark Office. You will also want to check whether the domain name you would like for your business website is currently available.
• Contact your Secretary of State to request a business name change form. If your business is located in Massachusetts, you can visit the Secretary of State’s website at www.sec.state.ma.us, and if your business is located in Rhode Island, there are forms available to help get you started at www.sos.ri.gov.
• Change the company name on all current licenses and permits. You will need to contact each government office separately to request a form to update your business’s name.
• Notify the IRS and determine if you will need a new Employer Identification Number (EIN). You should check with the IRS to determine how to put through a name change based on your business classification.
• Update all business documents with your new business name.
Typical Cost of a Business Name Change
Forbes estimates that a business name change can cost as little as $1,000 or as much as $50,000. Several factors play into your final cost, including the size of your business and how many organizations you must notify. You should expect all government organizations to charge a fee for processing your business name change paperwork as well. If you are considering changing the name of your business, it may be worthwhile to price out all of the associated costs before making a final decision. If you’re on the fence, seeing a price tag might sway your decision one way or another.
The fact of the matter is that changing the name of your business is not a decision to be taken lightly. Every business and its circumstances are unique, so it’s important to weigh all of the potential pros and cons before deciding whether a business name change is right for you. If you would like to start a conversation with a BankFive Small Business Specialist, don’t hesitate to contact us today!