Pasting your name on your company may seem like genius, but the potential pitfalls are bottomless.
This post was originally featured on Entrepreneur.com
We all know that we shouldn’t judge a book by its cover, but that doesn’t stop any of us from doing it. A company’s name is usually the first thing we learn about it, and it can color our judgment for a long time.
When it comes time to name your own business, it can feel logical to put your own name on the door. After all, you’re the one in charge, who is staking your reputation on the success of the venture. While of course, it’s your right to name your company whatever you please, having a business named for a living, breathing person can often result in unnecessary risks.
The name of your company will be loaded with meaning, whether intended or not. Even though it’s true that the quality of your product is a better measure of your organization’s potential, it’s been proven that the names we’re born with carry meaning beyond our control. The same can go for company labels that we choose.
Some researchers have even found that firms owned by and named for their heads are 21 percent less valuable than others. Since the name of your business is your choice alone, you’re looking at potentially causing damage to your organization before it even gets started.
It’s an unfair, unfortunate fact: Even if your product is far and away the best on the market, a bad name with negative associations can scare away potential customers who won’t even give you a chance. On the other hand, a good name creates positive mental associations that can improve your perceived credibility.
To be fair, there are certainly some benefits to putting your own name onto your company. By linking your front-facing persona to your business in an explicit fashion, you’re taking charge of your own reputation, either building it up or using it in its existing state to attract customers.
You’re also demonstrating to your clientele that there’s less of a chance that you’ll leave the organization for another opportunity. There’s little danger of your company’s name coming off as forgettable or generic in this manner as well.
Unfortunately, this approach carries some significant drawbacks. It’s an inescapable fact that any business named after its founder will be indelibly attached to him or her in the public eye. The future of Martha Stewart Living looked to be in serious jeopardy after her 2004 conviction on insider trading charges. It’s true that they were able to bounce back, but it’s always best to prevent yourself from getting into the situation in the first place.
Of course, nobody sets out to negatively affect their standing in the marketplace, but minimizing even unlikely potential damage to your brand is always vital.
It might sound a little fatalistic, but it’s pure pragmatism to consider that you may someday want to divest yourself of this venture or bring on an equal partner. This is going to be much more difficult when the company is inextricably linked to your name. You’ll be weeding out qualified buyers or partners who don’t like the idea of buying something that they might not feel true ownership of.
Even if you do make a successful sale, your name, and by extension, your reputation, is under someone else’s control. If the worst happens and your own public image takes a hit, your company can follow suit. There’s a reason the words name and reputation are synonymous.
Putting your name on your company can also needlessly complicate your drive for new customers. Google searches are a major driver of business in the current era; a name that is difficult to spell can get you lost in confusion. Conversely, a simple, easy-to-spell one might not stand out enough or tell potential clients much about your business. You might think your product or service can overcome any name hangups, and while you may be right, it’s best not to let these problems happen in the first place.
You’re not limiting your own personal image when you don’t name your company after yourself. It’s understandable that this thought has led some entrepreneurs to worry about their company overwhelming their own public perception, but the truth is that if your business is successful, your name will get out there.
Steve Jobs didn’t have to name his company after himself to become the most highly-regarded entrepreneur in the world. It was his dedication to building his company that made him a legend, not the name printed on their products.
More and more companies in the modern era are foregoing descriptive names for abstract ones that might not have that personal touch but obtain meaning through the effectiveness of their services. It’s a way to make the product stand on its own, free of potentially unfair or damaging associations with its creator.
The most important thing that your company does is provide a service that creates the most benefit for both you and your clients. A name that conveys this both descriptively and succinctly (not always an easy balance, but few things in business are easy) will position you best for success.
Think of Edsel Ford, who rather than being remembered for his decades spent steering the hugely successful corporation, is instead known for the auto industry’s biggest flop. In fact, the car wasn’t even in production until after his death, but the connection between the two is impossible to erase at this point.
When your name is synonymous with your business ventures, you can find yourself linking your least changeable qualities to your most chancy undertakings, and that can hurt you, despite your hard work and best intentions.