The Financial Implications of a Bad Business Name

What’s in a name? The answer is an awful lot. Choosing a great business name can instantly lodge you in the minds of the right people whether it’s clients, customers, or potential employees. In terms of business finances, however, choosing a bad name can have several implications. While a poorly chosen name can lead to various consequences, here are some very specific financial implications.

Expensive Marketing and Branding

When we start to brainstorm business names, we have to keep it simple. A name that is difficult to memorize or pronounce may require more extensive and expensive branding and marketing efforts to ensure it is in the minds of the customer. This can have an impact on the overall marketing budget because you have to work harder to keep that message up. Marketing and branding will have a significant budget attached to it but one of the best approaches is always to elicit word of mouth, and we can do this by ensuring the name is simple.

Ineffective Brand Promotion

A poorly chosen name can result in ineffective promotions of various aspects of the brand. We should always be aware of how best to promote our values but if we’re not able to get this across to the customer, we won’t find the right sector of the market. Likewise, if we do not promote our core benefits effectively, this will muddy the message and will impact our ability to communicate the brand’s unique selling propositions. This can result in potentially lost opportunities for promotion and selling and its various offshoots like upselling or cross-selling.

A Loss of Brand Equity

Brand equity is the financial and commercial value that is derived from the consumer perception of the brand name or the particular service or product rather than the product or service itself. If your reputation does not precede this can result in decreased customer loyalty market share and your business’s overall competitiveness in the market. What’s the result of this? Financial loss.

Legal and Rebranding Costs

If a business has to change its name because of negative associations or legal issues, for example, if there’s already a business with that name out there, the cost associated with rebranding including new signage, marketing materials, and legal fees can be astronomical and potentially damaging to the business overall.

Poor Customer Acquisition and Retention

Of course, all of these things can make it more challenging to acquire and more importantly retain customers. A name that has a negative association or a lack of recognition will have a knock-on effect on impacting customer trust and their willingness to engage with the brand. This is going to affect the overall revenue and profitability of the business, which is something that a great accountant will not be able to help you with!

A seemingly irrelevant thing in comparison to other components but it is absolutely pivotal. A bad business name can have far-reaching implications on your finances. Therefore, it is essential to carefully consider the potential consequences of a business name. What’s in a name? As you can see, it is more than most people realize.


Dan Smiljanić

Dan is a practitioner of project management and our resident geek. With a background in computer science, Dan is the lead product tester at Binfire. When Dan not writing code, you will probably find him cycling and hiking with friends.

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