Pros and Cons of Changing Your Business's Name
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 advantages and disadvantages.
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 will likely resonate better with your customers and help you stand out among your 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 re-branding with a new name, 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.
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 segment of the market that you never intended to target. Renaming your company allows you to redefine your identity and target a new — or expanded — customer base, which can have long-term benefits for the growth and survival of your business.
Con: Can Be Expensive and Complicated
It’s easy to underestimate the time and effort it’ll take to rebrand. Aside from administrative requirements such as notifying the IRS of your name change, you’ll have to simultaneously update everything that has the old business name on it — for example, your 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, it’s helpful to identify all areas that will be affected and develop a clear plan of attack, as one oversight can have far-reaching implications.
Pro: You Can Leverage Your Experience
When you’re first starting a 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, not descriptive enough, or simply based on a domain name that was available at the time. Once you have a clearer understanding of the products and services your company offers and your target customer base, you can leverage your knowledge and experience to choose a new, more appropriate business name.
Con: It’s Hard to Go Back
Depending on the size and type of business you run, the average rebranding initiative can cost anywhere from $1,000 to exceeding $50,000, according to 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 be the move that takes 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.
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.