Image: Creative Commons
There are a few reasons why company owners may think about renaming their home improvement business. The first—and let’s hope it’s not why you’re reading this—is that the company has encountered a raft of bad publicity or accumulated numerous lousy reviews, and the owner now seeks to get past all that. “Sometimes companies rename themselves as part of a rebranding effort, which is often a consequence of a major business screw-up or scandal,” says Josh Spiro in Inc. In the home improvement industry, it happens all the time that a company with a lousy reputation and/or an accumulation of service obligations (say workmanship warranties on a product made by a manufacturer now out of business because the product failed) changes its name to avoid either irate customers or suspicious prospects browsing for information online. Under those circumstances, that name change isn’t cosmetic, it’s legal. Since the prior company no longer exists, homeowners can’t sue them/it/you.
When It’s Time to Sell
A better reason to change your company name is salability. This is not often discussed in online articles about why and how to change the name of your business. But if you’re like many contractors, you made your own name the company name when you started. Let’s say, for instance, that you’ve been Joe Smith Roofing & Siding ever since you began operating out of your basement 30 years ago. Now the business has expanded into, say, replacement windows, bath liners, and sunrooms and you’ve long since moved into commercial office/warehouse space on the east side of town, where similar businesses are situated. At this point, you’re thinking of selling.
If you decide to list for sale the company you founded 30 years ago as Joe Smith Roofing & Siding, it may be more difficult to attract buyers, even if you’re doing $5 million and in revenue and your balance sheet looks good. The name may cause a potential new owner to pass on the deal, either because it makes your business sound like small potatoes or because you’re Joe Smith, he isn’t. People are bound to ask why the company’s named Joe Smith Roofing when nobody by that name works there. A key fact marketers point out when it comes to the name of a business is that if you have to explain the name, it’s not the right name.
If for either of those reasons or some other—a new partner comes on, say—you decide that you want to change the name of your business, the next step is to come up with a new name. There are various strategies. Think long and hard because you’re going to have to live it, or your buyer will. “Changing a business name requires a logical transition, if you want to avoid confusing your current customer base,” note the folks at WikiHow. “On the other hand, you may intentionally plan to distance your company from its previous identity with a totally different name.”
If you’re changing the name because you want to sell the company, then you probably want a name that says what you do and maybe where you do it or how your do it. If you’re Joe Smith Roofing, you could go with East Side Exteriors. But now you’re also doing bath liners, mostly in the winter months. How about East Side Home Improvement? Of course, it’s not particularly colorful. The owner of one Ohio window company, in coming up with a name, first wrote a list of 100 possibilities. There, in the middle of them all, was the winner: Zen Windows. It stuck.
Blogger Andre Bourque offers these tips on how to name a business:
- Choose a name that appeals to the customers you’re trying to attract
- Choose a comforting or familiar name that causes prospects to respond to your business on an emotional level
- Avoid a name that’s long or confusing
- Avoid cute puns
- Don’t use the word “Inc.” unless you’re actually incorporated
Once you have the name, call a meeting and let employees in on what’s happening. (You’d be smart to let them help you choose the name, with some kind of contest.)
“If you’ve already picked the new name yourself, you’ll need to go a lot further than just sending out an email announcing it,” notes business marketing website Envato. “Hold meetings, talk face to face, and really explain the rationale behind the change. People need to understand where it’s coming from, and why it’s important. Give them a chance to ask questions and get comfortable with the new name.”
Prepare for Multitasking
Once you have the name, implementing the name change is “a costly and disruptive process,” notes Caron Beesley of the U.S. Small Business Administration on its blog "Managing a Business." She suggests these steps:
- Check trademarks to see if a similar name is already trademarked
- Notify the Secretary of State in your state before changing any names in articles of incorporation
- Notify the IRS and be sure to file the proper form, depending on the way your business is incorporated. The agency has a special Business Name Change page
- Update or file for a new state or local contractor’s license
Website TheBalance.com suggests, in addition, that you “discuss a possible business name change with your attorney and tax advisor,” so as “to be aware of any issues that come with this change.” You’ll also need to change the name on your company checks, on all contracts and loans, on distributor agreements, and on the contract your company signs with homeowners.
There's one more important step: You’ll need a new look, a new logo, a new website (make sure everything directs from the old website to your new one), new stationery, and new printed materials. So start shopping for a marketing/advertising agency.
When all that’s in place, Envato advises that, rather than implement this transition on a piecemeal basis, pick a single day “where everything happens at once. No crossover, no period of confusion and insistency where people are seeing different brands in different places. Just pick a date, and switch everything over on that day. Make sure employees are fully briefed, too, so that they are ready to use the new name when they’re writing emails, answering the phone, or talking to clients.”