Your Business Name

Careful consideration should be made when choosing a name for your company. Studies of mergers and acquisitions claim that as much as 70% of the value lies in the trade or brand names.

All across the country, new and recently launched ventures like Digital Express, Techno Communications, and Quasar! That's right, just Quasar! Explanation mark included, but no starship.

Now, to be honest, I invented these names. As far as I know, they are not the monikers of actual companies. But I'm confident you'll agree they sound a lot like the real thing. (If your company's name is on the preceding list, forgive me. The coincidence is unintended).

I'll bet all of us have encountered companies with similar names. You can't tell what business they are in. And you wonder how many prospective customers pass them by, never realizing that Quasar! is a very efficient service bureau that outputs film to SWOP specifications for ad agencies or that Digital Express prints high-quality short-run color in small formats for retailers and travel companies.

Identify Yourself.

IBM and Apple work well as names that tell us nothing about their products and services, but both began life with identifiers in their names: International Business Machines and Apple Computer. Few companies are being started with names like New City Press or Walden Printing. What's more, it's not only new companies but also long-established printing firms, service bureaus and trade shops that are adopting names that rely on digital jargon. Words like printing, press, lithography, separator, engraving and type are replaced by high-tech-sounding terms.

Behind the naming frenzy lie a variety of intentions. Sometimes, companies seek to convey a progressive identity by using a high-tech name. When this is merely inflated rhetoric, the name does little to help the company. The name may even hurt the firm by creating mistrust among customers; misguided by the new name, the customers bring in work the company cannot do efficiently.

In some instances, important new capabilities are not conveyed by terms like press or separator. A name change may be required, but the existing name has lots of value associated with it. Abandoning it would be foolish. Trade names, like established brand names, carry valuable good will. Companies are careful about tampering with the name, the packaging and the contents of successful products. The issues are much the same when it comes to trade names. Studies of mergers and acquisitions claim that as much as 70 percent of the value lies in the trade or brand names. This strikes me as a high figure, but at even half the percentage, it illustrates the point.

Out with the Old.

Let's take New City Press as an example. Formally a general commercial printer, the company developed two areas of specialization. It now produces short-run documentation (black-and-white text, two-color covers) for after-market, auto kit manufacturers, and reports and large-format full-color presentation graphics for consulting engineers and for law firms specializing in litigation.

The CEO believed the old name misrepresented the company because New City had developed a broad range of digital capabilities including file management, prepress and reproduction that provided all of the firm's recent growth. Only 54 percent of New City revenues are now attributable to press work, down from 83 percent five years ago and 71 percent two years ago.

New City is on-line with several major customers and receives multiple jobs per day from them--each accompanied by an electronic purchase order. It provides file management, distribution and fulfilment for many of these jobs. The CEO expects that fully digital electrostatic reproduction and a range of additional digital capabilities--including other media such as CD-ROM and services such as fulfilment--will grow while offset lithography will decline. New City plans to take its expanded capabilities to customers in industries not previously served.

The CEO convened a committee to work with an outside marketing specialist to provide a new name for the company. After much careful consideration including the conduct of focus groups, a name change was proposed: New City - A Printing & Digital Communications Company.

Although it's a mouthful, the change identifies a new direction while preserving the company's established identity and continuing to emphasize printing. The CEO believes that eventually printing may be dropped altogether. The choice avoids a premature decision while preserving the option.

New Name, New Direction. New City's committee understood that the company had considerable equity in its name and realized that a departure from its well-established identity would have entailed unnecessary expense for uncertain purposes. The company would have to support a long, costly campaign to convince customers that the company with the new name was still New City.

While this brief and disguised description of an actual instance can't provide a comprehensive guide to naming, or renaming, a company, there are a few tips here that might be helpful to those of you who are about to choose a name.

The fundamental message is simple. As the technology continues to change, a company's previously most profitable processes may be less in demand. New capabilities originally acquired to support printing; the core production process and the primary revenue producer sometimes create unanticipated opportunities. This places a company making a transition in a quandary. How does it transform itself without abandoning what has been the heart of its business and what will remain its primary day-to-day focus for some years to come?

Back now to my friends at Quasar! The owners of soon-to-be-launched ventures may well pause for a moment to reconsider their strategy. Names that rely entirely on allusive images and high-tech associations, without conveying product or service, require costly marketing materials; the more ambiguous the name, the more expensive the campaign. XYZ Printing & Lithography may now seem a stodgy choice, retained for too long, but in its day half a century ago, the company's owners supported their transition from letterpress to offset litho with an effective name change.

Choosing and Registering a Business Name

When setting up a business you must think carefully about what you want to call it. You cannot simply call your business any name that appeals to you as there are strict rules and regulations governing both the form and the use of certain words and phrases in business names.

You may be required to register your chosen business name with an official Government body, although this will depend on whether you operate as a sole trader, partnership or limited company.

What makes a good business name?

Your business name is often the first point of contact between you and your customers, so it is crucial to choose the right one for your particular circumstances. Some customers may choose a business on the name alone so it is essential that your trading name reflects the quality and 'personality' of your venture. However, there are also legal requirements for choosing and registering the name and you must be careful not to breach these rules.

A good business name should:

• Be easy to remember.
• Be unique to your business (at least in the particular area where you do business).
• Reflect your business' character.
• Be easy for customers to find in directories and listings.
• Include any relevant legal information (for example, limited companies must include the word 'Limited' at the end of the business name).

Business names should not:

• Be complicated.
• Be confusing.
• Use slang or jargon that will date quickly.
• Be obscure.
• Use illegal or offensive words.
• Use restricted or prohibited words (unless proper authority has been obtained).

It is no accident that many towns and cities have taxi firms named AAA Taxis, AB Cabs or similar. Such names are ideal because they are easily remembered, inform customers exactly what the service will provide, and appear at the top of directory listings.

When do you need to register a business name?

If you trade as a limited company, you must register your business name with your relevant authority. If you are a sole trader or a partnership, you don't need to do this. However, even if you are exempt from registration, you are not free to choose any business name you wish.

Your business name must not:

• Conflict with a registered trade mark.
• Be offensive.
• Constitute a criminal offence (see the section on restricted words).
• Already be in use. You should check that your proposed business name does not conflict with other businesses in your area, registered trade marks or national organisations.

Does the local Business Names Act apply to you?

A business name is a title used by any sole trader, partnership or company, which differs from his or her own personal name, for the purposes of trading as a business entity. The local Business Names Act will set out the requirements regarding the use of business names, and the disclosure of requirements of certain details of ownership.

The purpose of the acts are to ensure that businesses cannot use names that mislead the public into believing that a business has a size or status that is not justified. It is also designed to ensure that potential customers and suppliers understand fully which business they are dealing with.

The Act will apply to your business if you are:

• A sole trader using words in your business name that are not your normal surname (with or without initials). For example, if a person called James Brown is a furniture dealer trading as J Brown, he is not affected by the Act; but if he trades as J Brown Furniture, or JB's Furniture, then the Act does apply.
• A partnership that does not use all the names of the partners in the business name.
• A limited company trading under a name which is not its corporate name (for example, Bloggs Limited trading as Bloggs Burger Bar).

If your business falls into any of the above categories, you are required to comply with the Business Names Act's Disclosure Rules (see next section).

The Act will not apply to your business if you are:

• A sole trader using only your own name (including a woman's married name).
• A partnership using only the names of all the partners as a business name.

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What are the disclosure rules in the Business Names Act?

If the Business Names Act applies to your venture, you must display the corporate name (or the name of each partner, or the individual owner's name) and an address where documents can be served, in the following ways:

• The details must be shown on all business letters, orders, invoices, receipts and demands for debt.
• The information must be displayed at all premises where business is carried out and where customers and suppliers are dealt with.
• In both cases, the information presented must be clear, legible and prominent.

In addition, partnerships must include all the names of partners not included in the business name on all business stationery (unless there are more than 20 partners). Where there are more than 20 partners, the additional names need not be listed on the stationery; instead, details of the principal office, where a full list may be inspected, must be included.

Which words and phrases are restricted by law?

As well as prohibiting offensive words in business names the local Business Names Act will list certain words and phrases that are restricted, either because their use may mislead the public or their use by unauthorised persons or organisations may constitute a criminal offence.

Using restricted words and phrases (also called 'sensitive names') in a business name requires approval regardless of whether you are a sole trader, limited company or partnership. Using restricted words in a name without approval is a criminal offence.

The restrictions to prevent misleading the public include:

• The word Limited (this must not be used unless the business is properly incorporated and registered).
• Words suggesting national or international pre-eminence (for example, American, British, European or International).
• Words that suggest a business has a specific size or status (for example, Society or Group).
• Words suggesting pre-eminence or authoritative status in an area of business (for example, Institute or Board).
• Words suggesting a specific objective or function (for example, Registered or Co-operative).
• Words suggesting certain professions (such as architect, optician, chiropodist, vet or dentist).
• Words suggesting certain organisations (such as Olympic).
• Words suggesting a charity (such as Red Cross).
• Words suggesting a connection with the Government or a local authority (such as Police, Health, Royal, School or Council).
• Translations of any of the above.

If you want to use any of these restricted names, you will require approval from statutory bodies before you can use the name.

Misleading the public, or 'passing off'

'Passing off' is the term in civil law for misleading the public, even if unintentionally, into believing a business is actually another business. For example, selling motor cars under the name Roles Roice could be considered as 'passing off' and you may be sued by an injured party in a civil court.

Remember that registering your company is no guarantee against accusations of passing off.

In addition, if you are a limited company, any injured party may object to your use of a name by registering a complaint and if it is considered that your business name is misleading or unsuitable, you will be directed to abandon the name in favour of another. Likewise, if you discover someone is using a similar business name to your own, you should register your objection as soon as possible.

Similar complaints against sole traders and partnerships are dealt with by the civil courts and you should seek the advice of a solicitor.

What about Internet domain names for businesses?

Allocation of domain names is not currently policed by any Government agency. Each GTLD (Generic Top Level Domain, such as .co.uk, .net, .com and so on) is subject to its own registration authority.

Several international and national bodies are responsible for managing records of domain name registrations.

Registration bodies include:

• VeriSign (www.verisign.com) - operates the .com and .net domains.
• NeuLevel (www.neulevel.biz) - operates the .biz domain.
• Afilias (www.afilias.info) - operates the .info domain.

These authorities will refuse to register a domain name if it:

• Infringes an existing trade mark.
• Is already in use.
• Is likely to be used for unlawful purposes.

If you believe your business name has already been registered improperly as a domain name, you can make use of the relevant authority's dispute resolution service. Though the service has no legal powers, they will try to reach an agreement amenable to all parties.

Where can you find more help?

A commercial solicitor should be able to advise you on the suitability of your proposed name.

Buying an off-the-shelf company name

There are professional brokers who offer limited company formation packages. They can provide an off-the-shelf company, complete with name and documentation, in less than 24 hours. They also offer a more bespoke service to allow you to create exactly the company you want. Most of these companies advertise online.

Hints and tips

• When choosing a name for your business, keep it simple; short names are most easily remembered.
• It is always wise to consult a solicitor before deciding on a business name. To avoid any problems, check your proposed name against business names in local telephone directories, trade journals, directories of professional bodies and the Trade Marks Register
• If you want to have a business website, you should also register your business name as a domain name. Even if you have no intention of setting up a website, you might want to stop competitors using your business name on the web. Consider all variants (such as .com, .org and .net) when registering your domain name.