Pros and Cons of Changing Business Name
Changing a business name can confuse existing customers and cause a loss of goodwill from the business brand.
What Are the Pros of a Business Name Change?
The Name Will Be More Aligned with the Brand
It is common for business owners to not know what their brand is when they first get started, so they simply choose a name for practical reasons. That said, when their business grows, they can afford to be more strategic with their branding. This may mean changing the company’s name, especially if the initial name was generic or no descriptive enough.
It is important to choose a name that fits one’s brand and that is easy for customers to repeat and remember. Also, it will help a company stand out from its competitors.
Possible to Target a Different Demographic with a New Name’
It is normal for some businesses to have something akin to an identity crisis sometime during their lifespans. In this situation, it can help for a company to rebrand itself. For example, if a business owner realizes that his or her market segment was not the one they initially targeted. By renaming the company, he or she can redefine their company’s identity and target a new, or expanded, consumer base. This can result in long-term benefits for a business.
A Business Owner Can Use Their Experience to Their Advantage
When a business owner first starts a business, everything is new, and therefore a learning experience. This applies to when an individual picks a name for their business. At the start, the owner may have chosen a name that was too specific, or perhaps too general, which can result in customers being confused.
When you’re ready to change your business name, please contact our business attorney in Los Angeles to help.
What Are the Cons of a Business Name Change?
Rebranding May Confuse Customers
It can take time for a business owner to build a reputation and have a target audience recognize the brand. Because of this, changing a business name can confuse current customers and set a business back. Even if a business is careful to communicate that it is rebranding, it is unlikely that all customers will be aware of the news. A business should be prepared to lose some customers after the name change. Indeed, some customers may think that the business closed because they cannot find the original name on social media or other platforms.
Rebranding Is Expensive and Complicated
A lot of time and effort goes into the process of rebranding a business. For example, a business owner will need to let the IRS know, as well as the local government. Also, a business owner will need to be sure they update anything that includes the old business name, including:
- Business licenses and permits
- Business cards
- Official business website
- Company mail addresses
- Social media handles
It can be expensive to update systems and order new materials, taking anywhere from weeks to months. Prior to changing a business’ name, it is important to identify any areas of the company that will be affected and develop a plan to handle any issues that may arise. One oversight can have serious consequences.
It Is Hard to Go Back to the Old Name if the New One Is Not Right
According to Forbes, the average cost of rebranding can be anywhere from $1,000 to $50,000, depending on a company’s size and its industry. These costs can rise exponentially if the campaign fails.
Prior to going forward with a new name, a business owner should make sure that it is the right move for his or her business. It is expensive to go back to the old name, and this kind of reversal can do damage to one’s reputation.
How to Choose the Best Business Name for a Rebrand
One of the most exciting parts of starting a small business is picking the company name. Once an entrepreneur finds a name they like, they often believe they will keep it permanently. However, the business name that an owner chooses when first starting a company may not be the right name for their business in the long run. Because of this possibility, many business owners choose to rebrand their business. Always be cautious when naming a business to avoid lawsuits from similar businesses, according to Nakase Wade business litigation attorney in Los Angeles.
Businesses may change names for any number of reasons, some of these being strategic in nature, and others more practical. Whatever the motivation, changing the name of a company often comes with positive and negative consequences. Like any big business decision, a business owner should begin by studying the pros and cons of each option prior to proceeding.
If a business owner is just beginning a company, then he or she should take their time thinking of a catchy name that conveys what the company offers. That said, if a business owner is prepared to change the name of their existing business, then things get a bit more complex in nature.
To begin, it is important to think about why one is interested in choosing a new name for the business. There are some common reasons why business owners decide to change names and begin the rebranding process:
- They decide to offer new services or products, and the existing business name is not descriptive enough
- They share a name with another business, and customers often get them mixed up
- Their business name has been involved in a scandal, and they want to avoid bad press in the future
- They think their existing business name is not interesting enough, and they want to choose a more unique name
Whatever the reason is behind the rebranding, a business owner should take their time in choosing the best possible name. Many business owners make use of name generators to give them a start. They might also choose to talk to customers about potential ideas.
Prior to making a name change official, a business owner should be sure to consider the below pros and cons.
There are many stories of both success and failure regarding companies trying to rebrand and change their original names. Sometimes, a new business name can result in a company growing. Other times, however, a new name is nothing but a major expense and mistake.
A business owner should be sure to do their research and consider all the pros and cons associated with a name change before going forward.
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