The Unwritten Rules of Naming Your Business

The following excerpt is from Brad Flowers’s The Naming Book. Buy it now from Amazon | Barnes & Noble | IndieBound

Every industry has a set of unwritten branding rules, or tendencies, that become codified over time. Sometimes they can become clichés. Most industries will have only a few types of names. This happens naturally: One company finds success, and the next company mimics them because it worked for the first. The next thing you know, it’s a rule, and no one remembers why it started. This applies to everything from how businesses are run to color choice and typography to their names. But let’s look at naming for now.

The name of my company, Bullhorn, is a good example. There are general naming trends in the branding agency world that have become unwritten rules. The first is to use a modifier with the word “brand,” like this:

Moving Brands
Interbrand
FutureBrand

I chose these companies because they’re all large, successful agencies that do great work. In many ways, they’re the agencies Bullhorn aspires to be. But their names are forgettable. More than that, they’re undifferentiated. How could you remember if you liked the work from Moving, Inter, or Future? The names are too similar.

The second general trend is the law firm model, in which you name the agency after the founder(s), like this:

Landor
Lippincott
Wolff Olins

While these names are unique, they don’t tell you much about the company. What they do is give historical weight. They sound established. They sound old. Choosing this sort of name puts you in the same tier as other professional service providers—hence the “law firm model” description. What these names tell consumers is that the providers will tend to be safe, traditional, and fairly expensive choices.

We also looked at advertising agencies because they often have branding capabilities. Many ad agencies start with the law firm model until the name gets too long and unwieldy. At that point they make it an initialism, like this:

WPP
BBDO
DDB

Again, I’m picking on these three because they’re massive, global companies that do the most recognizable work in their industry. They can take it. These names are undeniably easier to handle, but they’re interchangeable.

So, we have identified three general naming trends among our competitors: modifier with “brand,” law firm model, and initialism. The important thing is what to do with this information.

For Bullhorn, we didn’t want the name to have the word “brand” in it. We also didn’t want to name it after the founders. This is partly because when you Google my last name, you get a bunch of flower shops, but that’s beside the point. And finally, we didn’t want a name that would eventually become an initialism. Those tend to be forgettable, especially for a new company that doesn’t have the benefit of familiarity.

When it comes to business names, there’s a limit to how far outside the unwritten rules you can go. People tend to prefer names that sound like they fit in their category. But if the name is too similar to all the other companies, it will blend in with the noise. And if you go too far in the other direction, it won’t be recognized as something that fits.

Fortunately, “Bullhorn” still makes sense here. While they’re in the minority, metaphorical names are still used in the branding space, and often to great effect. Consider these examples, all branding agencies like Bullhorn:

Matchstic
Salt
Murmur

These companies are using metaphors in a way that’s similar to our logic. Maybe Matchstic creates the spark that starts the fire. Salt provides the seasoning that makes your brand delicious. Murmur is using a similar metaphor from an opposite perspective. It’s also about communication, but they aren’t yelling it in your face. They’re creating the word-of-mouth that travels from person to person. Thus, Murmur.

So. It’s important to think about your industry. Like ours, yours will likely have a few unwritten rules. What are they, and why do they exist? Can you break some of them and stand out from the crowd, or is there a good reason to follow them? Do you want to be perceived as established or as an upstart? That perception is greatly influenced by how you choose to position yourself in relation to your industry’s unwritten rules.

Unwritten Rules Exercise

To help you determine whether your industry has an unwritten rules, make a list of 30 or so of your competitors. It might help to divide them into groups. What are the most established companies in your industry? Which companies are disrupting tradition? Are there outliers that are just strange? Once you’ve identified your groups, you can most likely pick out three naming trends. Circle the trends you’re interested in pursuing, and cross out the ones you want to avoid. This will help inspire some business name ideas.

How to Start a Consulting Business: Determining Your Rates

How much should you charge as a consultant? This can be an extremely challenging question to answer because it involves doing research, taking risks and proper planning. Fortunately, all three of these skills will come in handy as an entrepreneur so you may as well get used to it now.

In most cases, I strongly suggest asking the prospect what their budget is. If they have a number in mind, you can see how well that aligns with what you were going to charge. You might find the prospect has a much higher budget than you anticipated. However, they may respond to that question by asking what your rate is. To avoid volleying back and forth before one of you gives up, you’ll need to have this established from the start.

It’s important to remember the rate you charge will have a direct impact on how people perceive you. Too low? They could take that as a sign that you aren’t that good. Too high? You better really good — and prove it — or people are going to pass. I’ll always be in favor of doing what is required to deliver what your client needs and charging for a more premium service. You have the opportunity to build your own businesses, why wouldn’t you want to be the best solution out there for your specific audience?

Keep in mind, “premium” for your audience may not be viewed as premium — or even applicable — for other audiences. That’s why it’s so important to do deep research on who you’ll be helping. This allows you to genuinely say, “I understand you have this challenge, this is the impact it’s having on you, and I’ve developed a solution to alleviate it. Would you like my help?”

Once you’ve honed in on your audience, it is time to figure out how much to charge them for the solution you’ve developed. Here are some simple methods.

Related: How to Start a Consulting Business: Determine Your Business Model
1. Ask people how much they paid for a similar service

This is an approach I stumbled across by accident when I first started consulting. I asked a friend if she needed help optimizing her Instagram profile so she could land more clients. She politely informed me she was already working with a consultant, with whom she was very happy. I was somewhat disappointed but decided to turn it into a learning opportunity. I asked her how much her consultant charged so I could get a feel for the going rate in New York City. I then asked her another question, “What else could they do, that would justify you paying even more?” This is a crucial question for all of us to ask. If you charge the average rate, you’ll get average results. Her response let me know exactly what I needed to do in order to be positioned as a more premium service.

If possible, get input from 5-10 people. If you operate locally, you’ll want to inquire about the rates in your area or a similar metro.

Related: Grow Your Side Hustle With Instagram Direct Messaging
2. Research competitors rates online

Some consultants publish their rates on their site, including me. The reason being, I don’t like yelling “Surprise!” at the end of an enrollment call as I finally disclose my rate. From my perspective, being upfront about my rate is a huge timesaver for both me and the prospect I’m connecting with. If I can’t help them on their terms (which includes their budget) it’s not worth spending 30 minutes to figure that out. I should note, the value of publishing your rates is hotly debated. Jake Savage, Sales Coach at Grow Savagely, states, “Having pricing on your website leaves everything up to a numbers game. It becomes an endless battle of trying to increase your conversion rates. Instead, get your potential client on the phone. Be persuasive and close the deal.”

That said, being able to openly disclose a rate is more aligned with a time-based or retainer model as some projects can be challenging to scope without bespoke input. For example, Jake Savage trains sales teams. If he’s training three people the rate would be lower than if he was training a team of thirty.

Do some competitive research and keep track of the results you’re seeing in a spreadsheet. Be sure to take note of the services your competitors are offering, too. It could help improve the value you deliver to your audience.

Related: How Not to Benchmark Your Way to the Bottom
3. Directly ask other consultants what they charge

This one may sound counterintuitive but you’ll be surprised at how many “competitors” are willing to help you out. If you offer in-person public peaking consulting in San Francisco, you’re not much of a threat to someone who offers the same service in Chicago. Consider reaching out to other consultants on LinkedIn and asking for some friendly advice.

“Hi Mary, I see you’re a Public Speaking consultant in Chicago. I’m starting a similar business here in San Francisco and would greatly appreciate it if you could answer just one question for me. How much do you charge for your services?”

One of three things will happen:

Mary will ignore you or refuse to disclose her rates. If that’s the case, keep it moving and ask someone else.

She’ll get back to you with a quick response. Thank her and continue doing your research.

She’ll get back to you with a longer response and potentially offer to connect with you via phone.

In the last scenario, you could potentially pick up some valuable tips that will help you accelerate the growth of your business.

You can also ask consultants who serve the same audience, with a different service. This will give you an idea of how much they typically pay for outside help.

Related: The 7 Deadly LinkedIn Sins
4. Charge based on the value you create

Being able to determine the return on investment a prospect can expect is a gift to any consultant. It’s much easier for a prospect to justify an investment if they understand what they’ll get out of it. If you operate in a market that allows you to do so, it’s worth digging deep and crunching the numbers.

Heads up, there’s some math coming at you.

Let’s say you’re a business process consultant, and you help clients keep better track of their leads. You’re currently talking to a prospect who has the following data points.

Leads per quarter: 200
Conversion rate: 20%
New deals per quarter: 40
Average deal value: $6,000
Average revenue per quarter: $240,000

During your enrollment call with the prospect, you discover their process for tracking leads is horrendous. They forget to call people back, aren’t taking proper notes and don’t have a clear handle on their sales pipeline. With your help, it’s obvious they could increase their conversion rate by at least 20%, which would give them a new conversion rate of 24%.

Through working with you, here’s how the new scenario could look.

Leads per quarter: 200
Conversion rate: 24%
New deals per quarter: 48
Average deal value: 6,000
Average revenue per quarter: $288,000

By helping them get a better handle on their business process, you can help them generate another $48k in just one quarter. Over the course of a year, all things being equal, that’s almost $200k in incremental revenue. Assuming they’re going to be in business for more than one year, the benefits of your work will continue to pay off. If you show them this data and tell them your rate is $25K, it’s much easier to justify the investment.

You may be working with clients who generate more or less revenue, but the process is the same. That said, if you want to increase your rates, solve more expensive problems.

This same approach can be applied when you’re consulting individuals. Helping an established keynote speaker further hone their public speaking skills will most likely yield greater results than helping someone who is just starting out. The established speaker knows they can get on stages, they just want to get on more, and be able to increase their rates. You can charge more because you’re solving a more expensive problem.

Related: How to Forecast Revenue and Growth
5. Do a feasibility analysis

Once you arrive at a rate, you have to determine whether or not it makes sense based on your desired income and lifestyle. If you want to make $100k/yr before taxes and charge $2,000 per project, you need to book 50 projects per year. That’s a whole lot of enrollment calls, emails, admin work, etc. I’m not saying this isn’t doable, but you may be better off creating a solution worth $10,000 and connecting with an audience that can afford it. You’ll only need to land 10 clients per year, and will most likely have a deeper relationship with them. This can easily lead to more business through referrals and testimonials.
6. Close with confidence

Your rate will evolve over time, but it shouldn’t evolve over the course of your first conversation. Never say “It depends” or “That’s negotiable.” Tell it to them your rate like they asked you what time it is. I know its tempting to discount fees just to win business, but that can easily throw off your projections and lead to more people wanting to work with you at a reduced rate. Referrals are one of the best ways to grow your business. If you do a good job, you’ll earn them. However, you don’t want people to say “You should work with Spencer Bell, he’s amazing, and he only charges . . .”

Establish a reputation based on the quality of service you provide, not a discounted rate.

Coronavirus and a Looming Recession: How to Raise Capital in Uncertain Times

For the past decade, we have been in the midst of the biggest economic expansion in American history with unemployment at a historic low of 3.6%.

Naturally, during periods of economic expansion, raising capital for a startup or new business is easier. Investors are incentivized to plow capital into nascent businesses because both the prospect of return is higher in comparison to other investment opportunities and the downside risk is lessened because of target customer spending and capital replenishment. If the “times are good,” investors generally know that even if founders make mistakes, they will have ample chances and opportunities to correct them.

But what happens when the market turns and we enter a recession? Or something unexpected, a so-called, “Black Swan” event like the Coronavirus upends global markets? How do entrepreneurs raise capital in when this happens?

This is a good question since most of the articles you will read about raising capital were written during times of economic expansion. Most likely, during the past decade. Admittedly, even my own experience raising capital dates to just the past 10 years. I was too young to experience the Dot Com Bubble and was insulated at law school during the Great Recession. More importantly, many of the entrepreneurs raising capital today have never experienced a recession either because they are too young or because it’s been quite some time since we’ve had one here in the United States.

Related: The Basics of Raising Capital for a Startup

To say that most entrepreneurs may be unprepared for this eventuality is an understatement. Last week, I was sitting down with an entrepreneur whose valuation was aggressively high, even by the standards of 2019’s booming economy. When I asked him about his plans for the next round, he admitted that his future valuation in successive rounds was based on a strong economy and that “downside protection wasn’t necessary — I just can’t see the point in dwelling on it.”

I disagree. Strongly.

Entrepreneurs need to prepare for a recession and need to know how to raise capital in a down market. One of the best ways to do so is to prepare beforehand. When the economy is strong, you have the most options. Exploit them.

Even if you are prepared, raising capital in a down market can be incredibly challenging and even confusing. First, entrepreneurs need to prepare beforehand by establishing a clear defensive moat around their business metrics with a strong focus on profitability. Investors respond positively to this in down periods given that so many of their other portfolio companies face significant threats.

Second, entrepreneurs should be flexible on terms and valuations understanding one important fact: capital is more important than anything else. Even if entrepreneurs need to take a lower valuation with more dilution than they anticipated, it shouldn’t matter.
Be proactive. Prepare beforehand. Focus on profitability.

At my company’s Demo Day five years ago, an over-eager investor came up to me asking, “What are the hot companies? I will write the check now.” I pointed to a company that now has a significant television presence. The investor immediately went over and invested $100,000.

No diligence. No conversation. Nothing.

Although this is an aberration, it illustrates an important point: when the economy is strong, raising capital can be incredibly easy.

But in a recession, it can get tough. That’s why the best thing to do is to shore up your position when the economy is roaring so that you are best prepared.

Related: How to Raise Money Even When You Don’t Have ‘Traction’

The first thing to do is to ensure that you have a strong cash position with clear runway to ride out a storm. Be relentless in your focus on cutting costs and streamlining operations. Eliminate side projects, new ventures, or other under-performing business units that are not contributing to the core value of your company’s product. Restructure personnel so you can focus all of your colleagues to perform at the top of their profession or license. Additionally, understanding whether you are “default alive” or “default dead” is another good way to measure the health and liquidity of your company.

Secondly, you should seek to get to profitability — by any means possible. In strong economic times, profitability is prized by investors because it indicates the health of a business with or without venture investment. In a down economy, when growth and profitability are ever more scarce, having a business in the black can place you in a very small elite set of entrepreneurs.

There are numerous ways of reaching profitability. One particular focus should be on the margins of the cost of delivery of your product. Take a hard look at the unit cost of delivery of your product or service and make adjustments as necessary. Further, you can cut sales and marketing expenditures in order to immediately put your business in the black. While you may be sacrificing growth by cutting marketing expenses, the decision may be warranted given the nature of the economy and what’s best for your business.
Accept more dilution to survive

When raising capital, entrepreneurs and investors often negotiate over the valuation of the business. Investors are trying to minimize the valuation in order to maximize their percentage ownership while entrepreneurs are trying to maximize valuation in order to minimize their relative dilution.

In a strong economy, entrepreneurs usually have the upper hand as valuations are being driven up across the board and investors have less power in negotiations. Conversely, in a down economy, investors often have the upper hand as there is less capital swirling through the market.

Related: 5 Steps to Raise Startup and Expansion Capital

Entrepreneurs need to get comfortable with accepting a lower valuation, and thus more ownership dilution, in a recession. This is especially acute when a business has a short runway of capital and needs an infusion of investment to survive. In this predicament, entrepreneurs will usually take whatever lifeline they can get.

What entrepreneurs need to focus on is the end goal; the survival and eventual successful exit of their business. Recessions are cyclical by nature and entrepreneurs can make up for lost value at successive rounds once the economy improves. More importantly, the discipline taught during these periods can make for massive financial returns down the road.
If you can’t raise capital today, do what you can to survive till tomorrow

During a recession, raising venture capital becomes significantly more challenging. If you find yourself in a position where you need to raise capital in a down market, there are a few key lessons you can take to heart. First, you should do whatever you can to cut costs and preserve liquidity in your company. Second, you should focus on achieving profitability. Lastly, you should be comfortable accepting more dilution in ownership.