Startups are like giving birth to a new baby, including coming up with a new name and personality for the business. When coming up with a name, you need to keep the following points in mind.
As for the name itself, you really have two roads to consider: (i) choosing an intuitive, descriptive name for your business (e.g., Restaurant.com, Toys R Us, YouTube, Netflix); or (ii) creating a whole new memorable name, not specifically related to your business (e.g., Google, Yahoo, Hulu, Twitter). If you have tons of money to spend, maybe creating a unique name is the right way to go. But, for the most of us, starting a business on a shoestring budget, I always vote for a clean and clear name that simply describes your core product offering. It will take less marketing money to educate a consumer on your business the clearer your name is. As an example, people will intuitively know Tennis Superstore is a place to go to buy tennis related products, without any other words or marketing message required. Which is important for consumers with very limited attention spans, getting bombarded by marketing messages from every direction.
Now, there are alternative opinions that a unique name is the way to go. And, I clearly understand their arguments. For example, how great it would be for your marketing efforts, if your brand name became the de facto term for an industry. Instead of saying "look for it on the search engines", you say "Google it". Instead of saying, "overnight it to me", you say "FedEx it to me". Instead of saying, "pass me a tissue", you say "pass me a Kleenex". But, that typically takes a lot of money and a lot of time to build up to that kind of brand position in an industry.
I thought the most clever name for a startup in the last couple years was Groupon. Because it did both things: it clearly explained their business (e.g., group coupons), and it was a cool and edgy name. I think their name was as much a part of their marketing success than anything else, as the name was virally spread from friend to friend around the internet trying to take advantage of a special daily deal. Customers saying "I bought a Groupon", sounds a lot cooler than "I bought a Living Social".
But, coming up with a name, is only half of the chore. Making sure it is available and non-competitive is the other half of the chore. More important than the name itself, is making sure your desired name is available for all potential uses and in all potential markets. So, the first place I start is the U.S. and international trademark databases, to make sure nobody is already using, or has reserved the use, of a potential name in the industry and countries you plan on operating.
The next place I look is the WHOIS records of the domain name registries, to make sure the desired domain name is available in all the variations I may need (e.g., com, .co.uk, .com.au, .ca). And, to me, a desirable domain name means a clean .com extension in the U.S., since so many people are familiar with .com addresses in the U.S.. So, BrandName.com is preferred to Brand-Name.com or BrandName.net. Business struggles aside, there was a reason Yahoo renamed Del.icio.us to Delicious.com after it acquired the business (a lot more intuitive for consumers who may have been looking for the site at the latter domain).
But, as we all know, .com extensions are the oldest, and the toughest to find good available names, at least for a low price still owned by the registries. But, if you can afford it and it is not too expensive, sometimes it makes sense to acquire a domain name from a third party, if it helps you achieve your long term branding and marketing goals. As an example, I acquired iExplore.com for $20,000 back in 1999. Although this was a painful short term move, it was a minimal long term investment for building the optimal long term brand for the business (in this case, an online adventure travel company). The "i" indicated internet based and the "Explore" was the core word we wanted to leverage for global exploration.
That said, if I could have found a better name for $19.99, I would have gone that route. But, Conquest.com, TheAdventureExperts.com, Explorama.net and BananaPlanet.com didn't fit my desired brand or marketing goals. Conquest was too "hardcore" and "macho". People would type "AdventureExperts.com", not "TheAdventureExperts.com". People would type "Explorama.com", not "Explorama.net". And, is BananaPlanet a place for adventure travel, fruit or porn?
As a last step, you should do U.S. and international Google searches around your prospective name, to make sure no other competing companies have similar names. For example, at iExplore, we subsequently found out there were also adventure travel companies called Explore in the U.K. and iXplore in Australia, which created confusion for travelers in the marketplace (which is global online). So, if different, but similar names are being used in the industry, pick a different name.
Whatever your business name ends up being, make sure it can clearly stand on its own feet: (i) clearly communicating your business line and brand goal; (ii) without violating any trademarks worldwide; (iii) without being too similar to others in the market; or (iv) without being too confusing for consumers to find.
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