How to Brainstorm a Great Business Name

Naming a business is by far the hardest task for startups when it comes to branding. It’s permanent, or at least feels that way. Somehow renaming a company seems like a much bigger deal than a logo redesign, although neither should be undertaken lightly.

Naming a company is also high stakes. A name is the primary calling card of a business, and shows up places that even a logo doesn’t. In casual conversation, for instance. It's also highly emotional. Think about people’s gut reactions to baby names. Everyone has a different association or interpretation (“That name picked its nose in third grade!”). And don’t even get me started on finding an available URL without resorting to some wacky misspelling.

When it comes to brainstorming company names, often quantity matters more than quality -- at least at the start of the process. Here are a few guidelines for generating a whole lot of quantity. Once you have at least a handful of solid contenders, you can decide on the quality.

1. Gather the right people and materials.
Get a good group in the room -- five to eight is about the right number. It’s helpful to have a mix of team members and outsiders. Invite copywriters or even just friends who are really good with language. You should have some way to display all the names being generated in real time. For example, go old school with huge pieces of paper stuck to the wall and magic markers. You will also need blank pieces of paper and pens for everyone involved.

2. Loosen up.
Start with a few word-association exercises to get everyone’s minds working and generate stimuli for the next step. Typically, we’ll choose two to three topics related to the business idea. So let’s say you’re launching a business that facilitates mobile payment. You might do one word association around the idea of “payment,” and one around the idea of “on the go.”

Everyone in the room is encouraged to shout out any words that come to mind from these concepts. So for payment you’d get answers like: bank, money, dollar, exchange, change, cash register, merchant and others. Someone should be capturing these words in a way that’s visible to everyone, and you continue until you’ve filled a large page, and then move on to the next. Ideally at the end of this exercise, you’ll have a few large sheets filled with words on the wall.

3. Start generating.
With a blank piece of paper in front of them, everyone now has to individually come up with 10 names in 10 minutes. This is an incredibly short amount of time to come up with 10 names, and that’s on purpose. It’s so people can’t get bogged down trying to come up with the perfect name, and instead just start getting names on paper. No one has time to overthink or be self-conscious. (There are no bad ideas.) If it’s helpful, they can use the words from the first exercise as inspiration.

4. Generate some more.
Next, everyone passes their sheet of paper to the person to the left, and each person has to come up with five more names in seven minutes that build upon the names in front of them. This provides each person with concrete stimuli for inspiration and allows them to expand creatively on the thinking of their neighbor.

5. Share and build.
Papers get passed one more time to the left. Now each person, with 15 new names in front of them, circles their five favorites and shares with the group. As everyone is sharing, names should get visibly captured and people should be encouraged to build upon these names as they’re read aloud.

At this point, you will have tons of names on the wall, and even more written down on sheets of paper. Many will be terrible, though often gems do emerge. But this doesn’t mean you’re done. It's helpful to have everyone vote for their top three favorites, and then end the meeting.

In the next few weeks, sort through every name (including those that weren't read out loud). Type your favorites on individual sheets of paper. (It can be hard to evaluate names on an Excel spreadsheet of hundreds.) Check whether the URL is available, even though this process can be excruciating.

At that point, sift through the names again. Set short deadlines -- perhaps one name per day -- for team members to generate five more names each and add them to the list.

Then make a short list. Sit with it. Remember that there’s no such thing as the “perfect” name that tells your entire story and that everyone will fall in love with on first sight, especially in the absence of a brand experience. You just need a good, solid name that is own-able, pronounce-able, spell-able, and doesn’t have any obvious negative connotations. Branding can take care of the rest.

Protecting your company’s value during a sale

If you have ever promised your child a treat in return for good behavior, you know all about negotiating leverage.

When selling an attractive business, you also have leverage—up to the point that you sign a letter of intent (LOI), which almost always includes a “no shop” clause, forcing you to terminate discussions with other potential buyers while your new found “fiancé” does due diligence before handing over the check.

After you sign the LOI, the balance of power in the negotiation swings heavily in favor of the buyers, who can then take their time investigating your company. At this point, there is little you can do.

Yet, with each passing day, you will likely become more psychologically committed to selling your business. Savvy buyers know this and often drag out diligence for months, ultimately manufacturing things to justify lowering their offer price or demanding better terms.

With your leverage diminished and other suitors sidelined, you’re then left with the unattractive options of either accepting the inferior terms or walking away.

We recommend four things you can do prior to signing an LOI to minimize the chances of your deal dragging on for months and becoming watered down:

1. Make sure your customer contracts have “successor” clauses

Try to have customers sign long-term, standardized contracts that include a clause stating that the obligations of the contracts survive any change in ownership of your company. Have your lawyer wordsmith the details.

2. Nurture and prepare a group of 10–15 “reference-able” customers

Acquirers will want to ask your customers why they do business with you and not your competitors. Cultivate a group of customers to act as references before you sign the LOI.

3. Ensure your management team is all on the same page

During due diligence, acquirers will want to run “isolation” interviews, during which they speak with your managers without you in the room. They are trying to understand if your company is pulling in the same direction and to identify any dissension or incoherence among your ranks.

4. Make sure you have audited financials

An acquirer will have more confidence in your numbers and will perceive less risk if your books are audited by a recognized accounting firm.

Tomorrow we’ll look at the top three things you can do to ensure your deal does not become diluted or fall apart at the altar.

Transferring Ownership in a Small Business

Just because a company has a key employee who knows a lot about the business, its operations, customers, and employees doesn't necessarily mean they should stay indefinitely.

I sold a temporary help business last year, and the key employee would only sign a six-month employee contract. At the time, this was a concern for the buyer. After one month of owning the business, the owner was counting the days until the six-month contract expired. With a key employee having a lot of knowledge but a bad attitude, not always honest, not a team player, and only out for himself, the company would not thrive and grow with him involved.

The new owner started interviewing and found several excellent candidates that he would enjoy working with--Oh, by the way, for less money and fewer perks than the previous employee was getting.