Naming Your Business? Consider These 3 Points First

This story appears in the January 2014 issue of Entrepreneur. Subscribe »

It's one of the first and most significant decisions a startup needs to make. Pick the wrong name--one that doesn't resonate with customers, is difficult to pronounce or spell or is too close to another business's name--and it could have major detrimental effects on your brand, SEO and bottom line.

Steve Manning is founder and CEO of Igor, a Sausalito, Calif.-based naming and branding agency, and the creative force behind monikers like Aria Las Vegas, truTV, Boogie Board and Gogo inflight internet. He sat down with us to discuss the game of the name.

Why is the right name so important?
The right name differentiates a startup from its competitors, helps build the brand and sparks an emotional connection with customers.

Even though the right name can help a startup stand out, 90 percent of businesses choose names that sound the same as their competitors. Look at airlines: Most choose names with a geographic reference--American, Southwest, Northwest, Alaska Airlines--and it's hard to distinguish one from another. It's hard to tell the world you're starting something new when your name gives the impression that you're just like everyone else.

You can spend a lot of money on ads to tell people how your company is different, or you can paint "Virgin" on the side of a plane. That name sends the message that the airline is different; the name makes it stand out.

What are some points to consider?
Generic names aren't interesting or engaging or emotional. No one wants to spend an entire flight talking to someone from Strategic Name Development, but a seatmate with a business named Igor is memorable. A good name has layers of meaning and association, evokes emotion and is easy to pronounce. You could choose a made-up name like Oreo or Snapple that is memorable, and because it's fun to say, people repeat it, or an evocative name like Virgin or Apple that creates emotion and imagery to help position the product.

What mistakes do startups make when choosing a name?
It's a mistake to be quirky for the sake of it. When startups choose names like kwkly or qwerly, all they are thinking about is whether the name is unique, without regard for how it looks to the world. Your name has to be different for a good reason. And we need to be able to spell it. A name that is hard to spell will make it impossible for customers to find you. They'll be online thinking, How do you spell qwerly?

There is also a misguided focus on tossing out good names because of their dictionary definitions. But no one cares about the official definition; a name should demonstrate what your business is all about. The Chrysler Crossfire is a great example. Despite the fact that it doesn't have a positive dictionary definition, it works because it sounds like a car that James Bond and Jason Bourne would drive. You're not naming a company; you're naming its positioning.