Last Updated Jul 30, 2010 3:19 PM EDT
The first time I was threatened with a lawsuit, I had been in the business for only three months. I had hastily chosen the name "Brass Tacks Communications" for my market research business without doing my homework to see if somebody already had that name. Sure enough, there was another Brass Tacks Communications offering marketing services in my city.
After a few nasty letters from its lawyers, I was forced to change my company name.
We were already up and running, so I needed to act fast. I couldn't think of any good names in a hurry. Desperate for something that I wouldn't get sued over, I chose my family name and called my business "Warrillow & Co."
Some of the great brands we know and love today are derivatives of family names --Disney, Johnson & Johnson, and Ferrari come to mind. But in my experience, having your family name in the company name can be a liability in three ways:
1. Some customers insist on dealing with you personally
When your name is on the door, some customers insist that you personally tend to their account. We had a big bank as a customer, and it actually asked me to write a clause into its annual agreement stating that I would be the contact at our company. Keen to win their business, I agreed to be their point person only to regret it later when I was spread too thin managing their account and my business simultaneously. I neglected client management basics, taking too long to return their calls and providing sloppy work. Our relationship suffered and eventually they fired me and my business.
2. Perfection is the enemy of growth
When your name is on the door, you can become overly protective of your product quality to a point where you can slow your growth. In the early days of Warrillow & Co., I was so obsessed with not sullying my family name that I would personally read everything that went out on our letterhead. Before we sent a new report to a client, I would ask the researcher to let me read it. I would knit pick over details and wording and obsess over the tone of the reports because I was worried that the researcher's commentary would be mistaken for my personal opinion.
I was so obsessed with the quality of our work and with not dishonoring my kin that I was choking off our ability to stumble and learn from our mistakes. My meddling and micro-managing frustrated employees and we started to miss customer deadlines and lose people.
3. The business can be difficult to sell
When it comes time to sell your business, having your name on the door can make it tougher to sell. In 2004, a company approached me wanting to buy my business. The only catch was that the owners wanted me to stay on for five years because, they reasoned, my name was on the door and it would take that long for them to transfer client loyalties from me to them.
I declined their offer but decided to rebuild the business, transforming it from a squishy service business reliant on me to a subscription-based advisory service that relied on others to handle a rigid set of deliverables. I de-personalized the business so customers were buying our subscription, not me. It took four long years to sufficiently distinguish the business from me enough to be acquired. I think having my name in the company name prolonged that process.
How has your company name hurt or helped your company's growth?
(Joe six pack photo courtesy of Flickr/Mykl Roventine)