Pros and Cons of Changing Your Business's Name | Fora Financial Blog
Close
The Pros and Cons of Changing Your Business's Name
September 25, 2019
Changing-Business-Name

The Pros and Cons of Changing Your Business's Name

Most new entrepreneurs spend time considering how to name the name a small business. Once they select a name, they often think that it’ll stay with their company permanently. However, the name you choose might not be the right name long-term.

Indeed, some of the most successful companies today changed their business name at some point. Can you imagine if Google was still called BackRub?

Businesses change names for numerous reasons — some strategic, and others more practical in nature. No matter your motivations, changing your company’s name often comes with consequences, both positive and negative. Like all major business decisions, you should start by weighing the pros and cons.

In this post, we’ll offer tips on how to change your business’s name to something that will connect with customers. In addition, we’ll examine the downsides of changing your business’s name, including how it can be a hassle.

Should You Change Your Business’s Name? Here Are the Pros and Cons:

Pro: More Aligned with Your Brand

Many business owners don’t know what their brand is when they get started and choose a name for practical purposes. However, as your business evolves, you can be more strategic with your branding. This may include changing your company’s name — especially if you initially went with something generic or nondescript.

Choosing a business name that’s aligned with your brand and is easy to remember will likely resonate with your customers. Plus, it’ll help you to stand out amongst competitors.

Con: May Confuse Your Customers

It takes time to build your reputation as a business and gain name recognition from your target customer base. Due to this, changing your name can confuse your existing customers and undo the progress you’ve made with potential customers. Even if you clearly communicate that your business is rebranding through marketing materials, it’s unlikely that everyone will hear the news. You should be prepared to lose at least a few confused customers following your name change.

Change-Business-Name-In-Text

Pro: You Can Target a Different Demographic

It’s not unusual for a business to experience an identity crisis over the course of its life. When this happens, many companies choose to reinvent themselves by rebranding.

For example, you may realize that you’ve become popular with a market segment that you never intended to target. Renaming your company allows you to redefine your identity and target a new — or expanded — customer base. By doing this, there may be long-term benefits for your business.

Con: Can Be Expensive and Complicated

It’s easy to misjudge the time and effort it’ll take to rebrand. Aside from tasks such as notifying the IRS and contacting your local government, you’ll have to update anything that features your old business name. For example, you’ll need to update your business licenses and permits, business cards, website, and email address, to name a few.

Updating systems and ordering new materials is not only expensive, it can set you back weeks, or even months. Before changing your name, try to identify areas that will be affected and develop a clear plan. Even one oversight can have far-reaching implications.

Pro: You Can Leverage Your Experience

When you’re first starting an official business, everything is a learning experience. You don’t know what the effects of your decisions will be until you do it. This is also true for naming your business.

Initially, you may have chosen a name that was overly descriptive. On the flip side, maybe it wasn’t descriptive enough, or based on a domain name that was available at the time.

Once you’re confident in your business’s products and services, and who your target customer base is, you can choose a more appropriate business name.

Con: It’s Hard to Go Back

Depending on your business’s size and industry, the average rebranding initiative can cost anywhere from $1,000 to over $50,000, per Forbes. These costs can easily double if your campaign is unsuccessful. Before moving forward with your name change, make sure it’s the right move for your business. Going back to your original name and brand is expensive, and the damage to your reputation may be hard to repair.

Conclusion: Consider Your Business’s Future Before Changing Your Name

There are countless stories of success and failure when it comes to companies changing their names. Sometimes it can take your business to the next level, and other times it’s the kiss of death. If you’re considering renaming your business, you likely have good reason. Just be sure to do your research and weigh all the possible pros and cons first.

Have you changed the name of your business? Tell us about your experience in the comment section below!

Editor’s Note: This post was updated for accuracy and comprehensiveness in September 2019.

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Fora-Logo_TEAL-KNOCKOUT
Post by:
Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].