Entrepreneurs should consider the following when choosing a name for a new business.
Entrepreneurs frequently consider descriptive, geographic, or surnames when naming a new business, such as Quality Dry Cleaners, Falmouth Dry Cleaners, or Thomas’ Dry Cleaners. The most significant problem with descriptive or geographic names is that usually they may not be used exclusively; that is, competitors are not precluded from using similar names. Other dry cleaners--in their business name--may describe that their service is "quality" service or may identify their geographic location, even if other dry cleaners have already done so. Generally, the law will not allow a prior business to preclude a later business from using common terms to describe its goods or services or from identifying its geographic location. * Similarly, others with the same surname may use the name in their business. In choosing a relatively generic name, a business may find itself subject to competition from later comers with confusingly similar names--a circumstance better avoided.
A separate concern is that a narrow name may create problems when a business expands its offerings or operations. A business that subsequently expands into new product or service lines may be flummoxed by its original choice of name. ** Similarly, a Falmouth shop seeking to open a second shop in Hyannis may find its choice of name limiting.
As a result, a suggestive (or totally arbitrary) business name is preferable. "Big Shrub" for a landscape operation is not descriptive but does provide a creative suggestion of the services offered. Probably, if proper formalities are satisfied, Big Shrub can prevent others from using the same or a similar name.
Once a name is selected, it must be compared with existing trademarks and business names, to avoid a situation where--after a significant investment in establishing a business name--a prior user of the name seeks to terminate the latter’s use of the name. Obviously, use of an existing trademark or famous name is to be avoided.
Once the name is chosen and cleared, it should be registered as a trademark; registered with state and|or local authorities; and registered as a domain name, if appropriate.
The moral of the story: choose your business name wisely.
* A business that uses a descriptive or geographic term successfully for several years may be able to protect the name, such as has been done with Cape Cod Potato Chips.
** A good example is given by Richard Stim on www.nolo.com: a business dealing in canvas awnings and choosing the name "Sturdy Canvas Awnings" may regret the choice if it expands into canvas signs or vinyl awnings.
