The Top Pros and Cons of Changing Your Business’s Name
How to Pick the Perfect Business Name For Your Rebrand
If you're just starting a business, you can take your time picking a catchy business name that encompasses what you offer. However, if you're ready to change the name of your existing business, it can get a little more complicated.
To start, consider why you're interested in selecting a new business name. Here are some common reasons that business owners change names and start the rebrand process:
They offer new products or services, and their existing business name is limiting.
They share a business name with another local business, and customers often them them confused.
Their business name has been involved in a scandal, and they want to avoid bad press going forward.
They think that their current business name is too boring, so they'd like to rebrand to name that is more unique.
Regardless of your reason for rebranding, you should take time to select the best possible name this time around. Many business owners utilize business name generators to get them started. Or, they poll their existing customers to see if they have any ideas.
Before you make your name change official, however, be sure to consider the pros and cons below.
Should You Change Your Business’s Name? Here Are the Pros and Cons:
Pro: Your New Name Could Be More Aligned with Your Brand
Many business owners don’t know what their brand is when they get started, so they 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 your various competitors.
Con: Rebranding to a New Name 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.
Even if you clearly communicate that your business is rebranding, 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. In fact, some may assume that your business has closed when they can't find your original name on social media and other platforms anymore.
Pro: You Can Target a Different Demographic With Your New Name
It’s not unusual for a business to experience an identity crisis over the course of its lifespan. 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: Rebranding Can Be Expensive and Complicated
It’s easy to misjudge the time and effort it takes to successfully rebrand your business. For instance, you'll need to notify the IRS and your local government to tell them that you're operating under a new business name.
In addition, you’ll also have to update anything that features your old business name, such as:
Business licenses and permits
Business cards
Your official business website
Company mail addresses
Social media handles
Signage
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 start an official business, everything is a learning experience. This is often the case when selecting a name for your business.
Initially, you may have chosen a name that was overly descriptive. Or, perhaps the name you selected wasn’t descriptive enough, causing your potential customers to be confused.
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 To Your Old Name If You Regret Your Decision
Depending on your business’s size and industry, the average rebranding initiative can cost from $1,000 to over $50,000, per Forbes. These costs can easily double if your campaign is unsuccessful.
Before moving forward with your new small business name idea, 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. In some cases, choosing a new business name can help a company grow. However, other times it can be an expensive, time consuming mistake.
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.
Editor’s Note: This post was updated for accuracy and comprehensiveness in May 2021.
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