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Choosing the best business name: Rules and common mistakes

Choosing your company’s name is one of the most important decisions you’ll make when you start a new business.

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Nairametrics Financial literacy, invest intelligently, portfolio diversification, treasury bills, Your next of kin, or not?, Investing in uncertain times, Things to accomplish during COVID-19 lockdown

The reality is that names do affect perception. The instant we hear a new word, our brains immediately go to work trying to make sense of it – What does it remind us of? How does it feel?

What’s in a name?

A lot, as it turns out, especially when it comes to naming your business.

Choosing your company’s name is one of the most important decisions you’ll make when you start a new business, as it sets the tone for all your future branding initiatives. For better or worse, your business name helps create a first impression with potential customers and investors, so it’s not a decision that should be taken lightly. The right name will empower your business for years to come, so give yourself enough time to make a smart choice.

In this article, we’ll review the 10 crucial mistakes to avoid when choosing product brand names.

[READ MORE: 12 lessons on business strategy from the game of Chess]

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Copying a well-known name

No one likes a copycat, so why go down that road? It’s all too common for people to copy coined business names. It may seem smart to borrow some brand power from established names. The problem is it makes you seem lazy and unoriginal. Not to mention, you could wander into a legal gray area.

The whole point of branding is to get people talking about the great things that set your business apart. Names have strong associations.

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Choosing a long name

Shorter is better when it comes to choosing a business name. Longer names are difficult to remember and tiring to look at. Aim to keep your business name short for two reasons:

  • Everyone gets distracted easily these days. Don’t make people work hard to recall what your business does.
  • Chances are, you meet potential customers everywhere. You want the most forgetful person to recall your name even without a business card or brochure.

If you’re determined to go with a longer name, try coming up with a shortened version as well. Think CBS, NBC, or P&G.

Ignoring trademark laws

New companies are popping up everywhere; so, choosing a good business name is getting tougher every day. Checking for existing trademarks can help you avoid legal battles down the road. Keep in mind, there are federal and common law trademarks. A competitor with a similar name doesn’t have to own a registered trademark.

A quick Google search is an absolute must and you may want to supplement it with a professional trademark search.

Choosing complicated spelling

The last thing you want to do is confuse people with a name they can’t say or write easily. If you’re using common words, customers will choose the most obvious spelling. Now imagine what will happen if they try finding you in a search engine and 20 other businesses come up first. You will lose valuable business, and the customer still won’t know how to find you.

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If you can’t say it, you won’t be able to remember it. When you make up names that aren’t real words you need to make sure that they are easy to pronounce. Don’t try to be clever at the expense of being understood.

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Brainstorming in isolation

Starting a business is about sharing your products with the world. That’s why you should consult people you trust when you have a strong list of names. You see and hear things one way; other people catch things you don’t. Even big companies run into trouble when their creative teams overlook alternate meanings or hidden words. With this in mind, make sure you:

  • Say names aloud at various speeds. When mashed together, words can unintentionally send the wrong message.
  • Write names down without spaces. When you pick a domain, you don’t want the joined words to contain alternate meanings.
  • Check for words in other languages. If you work with international customers, make sure your business name isn’t offensive in another language.

Don’t choose a name that is too generic

It’s hard enough to stand out, so don’t choose a name that is too generic. Generic names include acronyms; stay away from them. You want a name that will provoke curiosity and the desire to learn more about the company behind the name. Being too generic will cause people to overlook you if you sound like every other company out there. A generic name will also make it difficult to buy the domain name and to register the name for social media accounts.

You haven’t researched competitor names

Many businesses don’t realize the power of brand recognition and will have almost the exact name as another business, especially in the same industry. The name should be creative and strategic, set you apart from the pack, and summarize what the company does.

You’re following a short term trend

Do your best to select a name that will stay relevant for years. Many phrases are catchy, so they get overused and annoying within a few years. Businesses can influence trends, but they don’t have complete control over them. Trends frequently develop associations with certain groups or stereotypes, but those stereotypes don’t always overlap with your intended target audience.

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[READ ALSO: A look at some financing options for small business owners]

You haven’t tested your name with your target audience

Naming a company may be one of the most important strategic decisions a company will make. Once you have the name (or names) you are considering, take the extra step and test it with the target to make sure it delivers the image you want and it resonates correctly. And make sure that the target can easily pronounce the name; this will eliminate market confusion

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Even if you don’t make these 10 common mistakes, you should still consider getting a legal opinion on the name you have chosen.

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Investment Tips

Where to invest $10,000 right now

Entrepreneurs, financial experts and investment analysts suggest what sectors or assets to invest in if you have $10,000.

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Where to invest $10,000 right now

The upsurge in COVID-19 cases around the world has kept global investors flocking the world’s safe-haven currency at an exponential rate, the high demand for the greenback is coming on the high geopolitical uncertainty prevailing in today’s financial market.

Also, it’s important to note at the currency market, the U.S dollar remains king. According to the International Standards Organization, 90% of currency trading done globally involves the U.S. dollar, most crypto assets, virtually the most liquid commodities are priced in the U.S dollar not forgetting about 40% of the world’s debt is dominated in the greenback.

READ: If you have N1m today, how would you invest it?

READ: Hackers, expose crypto wallets worth $150 million at Kucoin

So Nairametrics felt it paramount to ask a hedge fund manager,  entrepreneurs, and financial experts, about what sectors or assets they would invest in if they had, say, $10,000.

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Their responses were revealing and diverse as they were varied—ranging from; buying global equities, local stocks, real estate holdings to investing in digital assets.

READ: Key ‘side-hustles’ Nigerian Bankers supplement their income with

READ: What BBNaija winner, Laycon can do with N30 million  

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Gavin Smith, veteran trader, and managing partner at Panxora Crypto Hedge Funds.

I would scale into BTC $2,000 now, $2,000 when it comes off to $10,000, then add $2,000 at $9,000 and another $2,000 at the $8,000 level. If BTC then breaks above $13,000 I would buy any of the above orders that had not been filled of the remaining $2,000. I would put $500 into each of these four DeFi protocols: LINK, COMP, KNC, and OMG.”

READ: Real Estate Developers express fear over selection process of CBN’s N200 billion Housing Fund

DeFi is an exceptionally volatile market and these would need active management, but they represent an opportunity with exceptional upside potential. This is a market our analysts are building a profile in, to advance our DeFi hedge fund later in the year.

READ: Real Estate: A universal convertible survival tool

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Debo Adejana – Founder, MD/CEO – Realty Point Limited.

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I follow the investment wisdom that says, ‘invest in what you know and understand’. I know and understand real estate probably more than any other investment asset class.

So, the decision as per what I will invest in with $10,000 which should be upwards of N4m is simply; Real Estate. I will either do rental income property as part of a properly organized shared-ownership structure or speculate on land depending on how much time I have with the money. The reasons are very basic, real estate investments have been known to survive and surpass any and every challenge.”

READ: If you had $100,000 in cash, where would you invest it in US markets?

Darlington-Morsi Onyemaka, Co-founder Quba Exchange Forbes Accelerator Cohort ’20.

One of the main pointers to a good investment portfolio is diversified across multiple asset classes which should be according to the investor’s risk appetite. Looking at my long-term investment strategy, real estate fits in perfectly for Ten-thousand dollar investment. My portfolio is already jam-packed with high-risk assets and Real Estate will do a great job at hedging the risk factors without minimizing profitability in any significant way.”

READ: Foreign investment inflow into banking sector falls by 95% in Q2 2020

Francis Obasi Cofounder and CEO of Lead Wallet.

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If I have a spare $10,000 right now for investment, first, I’ll invest 55% of the funds into new crypto startups being run by professionals and backed by companies like Coinlist; LID Protocol, and Binance. Second, I’ll invest 20% of the funds into Lead Token as there is still potential for massive growth in the coming months/years. Third, looking at the situation of Nigeria, and not knowing where the current protest (uprising) on #EndSARS is headed, I’ll reserve the rest 25% in USDC/USDT to hold against a potential Naira crash. I’m confident that there is every possibility that the Dollar will become scarce again in the coming weeks/months due to the ongoing protest, thereby returning instant gains for immediate spending on basic needs.”

READ: Ethereum robber transfers $1.5 million worth of Crypto

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Dapo-Thomas Opeoluwa Global Markets analyst and an Energy Trader.

“There are so many ways to invest $10,000. The real question depends on the investor. His risk appetite, his investment horizon, when does he or she want to liquidate? The answers to these now limit the options of investments. So for safe and long-term investments, I always advise investing in index funds, Eurobonds or the Nigeria International Debt fund. This is with the caveat that says ‘low risk equals low returns’. Also, I usually would say, invest in investments that beat inflation so you won’t suffer negative real turns.”

READ: Total, GTBank, Zenith Bank up, Bulls return to Nigerian Stock Market

Victoria Njimanze Investment Analyst at a Nigerian Investment Bank

Well, off my head I’ll go with Bonds, cryptocurrency, Stocks, and then alternatives.  I would definitely make my findings first, but I’ll make a larger portion go into Bonds say 40%, 30% in cryptocurrency, 20% in stocks, and 10% in alternatives like commodity market so as to have a diversified portfolio.”

READ: Cryptos: Nigerian financial experts talk risks associated with trading digital assets

READ: A mysterious Bitcoin Whale causes brief panic sell-offs at Bitcoin’s Market

Akinsola Esan, a credit risk analyst at Nigeria’s Tier 1 Bank.

Basically, the goal is to earn substantial returns on investments – dividends, capital appreciation, and secondly, beat inflation in naira which is currently about 12.85%. With $10,000, I’ll spread my investments across foreign equities such as purchasing and holding stocks of companies like Apple, Facebook, Google, Fastly, Nio, Amazon, to list but a few, and also buy some top-performing dollar-denominated Mutual funds such as Vantage dollar funds and some other ones recommended by Nairametrics. Lastly, I will look in the area of cryptocurrencies by investing as much in bitcoin, Ethereum, and other recognized Cryptos. There are some dividend-paying stocks listed on the Nigerian stock exchange as well, I will consider holding a number of them.

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Bottom line

Due to the present fickle nature of global financial markets, most financial experts interviewed above are unsurprisingly keen on mostly U.S dollar-dominated financial assets, thus reflecting the greenback’s dominance in demand amid the COVID-19  infection exploding at an alarming rate.

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Business Half Hour

How investing in US, UK stocks can be seamless – Tosin Osibodu

Tosin Osibodu discusses how investing in foreign stocks can be a more knowledgeable and transparent process.

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Investing in stocks has always been touch-and-go for Nigerians, both at home and in diaspora. A typical tale of the-more-you-look, the-less-you-see, many Nigerians have experiences – both real and imagined – of how they have lost some money in the stock market.

Amidst all of these, startups offering an opportunity to invest in foreign or local stocks have the problem of trust to deal with, before they can successfully break into the market.

Co-founder and Chief Executive Officer of Chaka, Tosin Osibodu, said this was a major challenge for Chaka when it launched in 2019.

Tosin was a guest on Nairametrics’ Business Half Hour radio programme where he explained that with Chaka, investing in foreign stocks have become a more knowledgeable and transparent process that enables investors to make informed choices.

Chaka, as Tosin describes it, is a gateway that allows Nigerians to easily invest in local and foreign stocks, and also allows those in diaspora to invest in local stocks.

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According to Nairametrics’ investment analyst, Olumide Adesina, Chaka “makes it easier for many Nigerians to access world brands like Coca-Cola, Pepsi, Twitter, Facebook, Amazon, General Electric, and provides top-class access to stocks listed.”

With Chaka, global stocks such as Apple, Alibaba, Google, Manchester United, the S&P 500 index and several others listed on NASDAQ, the New York Stock Exchange, and the Nigerian Stock Exchange, and top brands from over 40 countries are only a tap away for investors.

Averting the sour experiences

Sour experiences in investing are usually a result of poor knowledge of the market, and little or no access to market insights. As Tosin explained:

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“The market is not bad everywhere at the same time. The secret is knowing the right market to invest at any time, and having the right information.”

Information about market fundamentals, insights and knowledge of the right portfolio at any time will guide an investor towards taking the right buy-hold-or sell decisions, and the Chaka weekly webinars offer this.

Apart from the regular insights, investors can also rest easy knowing that they have the backing of financial regulators such as SEC, NSE, CSCS in Nigeria and SEC, FINRA, SIPC, IRS in the U.S. This is no mean feat for investment start-ups and Tosin admitted that getting the approval of these regulators formed a large part of the initial challenges.

Building automated trading systems to create wealth

During the years spent schooling as a systems engineer in the US, Tosin observed the ease of investing in the stock market, a direct contrast to what was obtainable in Nigeria. Though a systems engineer by training, he was passionate about solving the problem, and reducing access barriers to local and global markets.

Back in Nigeria, he teamed up with his life-long friend and cousin, Bolanle Osibodu to set up Chaka.ng. With a core financial expert and a systems engineer, the company was all set to get rolling.

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The goal was simply to reduce barriers to trading stocks across borders, and help Nigerians cash into the emerging mine that was the stock market.

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With the Chaka solution, investors can register, get verified, buy and sell stocks the same day. The no-minimum investment rule also makes it open to beginner investors, allowing them to buy as much as they can afford.

For instance, even though the share unit of a company is worth $500, an investor may invest $100 and free up funds to build a well-rounded portfolio. According to Tosin, “if you are above 18 years and interested in investing, we don’t believe that you should be restricted by funds”.

It also has other unique features like the Naira or Dollar conversion on a per-asset-basis so that you can see how a Naira investment would perform in dollar assets or vice-versa. Its low transaction charges and wire transfer fees makes it even more affordable for Nigerian investors, especially since there are no hidden charges.

Collaborations

There are other companies who serve as digital brokers to Nigerian investors. But rather than see them as competitors, Tosin and his colleagues regard these startups as potential collaborators.

“Anyone that does what we do and shares same vision is a potential collaborator,” Tosin said.

One of the ways of collaborating is by providing execution services, white-label services and market automation technologies for corporate and institutional clients, so that these companies integrate Chaka into their operations to provide solutions for clients such as KYC verification, and user-onboarding.

Chaka partners with Citi investment capital in Nigeria and a global broker in the US, through which its offers are regulated by the relevant bodies. The aim of all collaborations is not just for profit but to improve client trust, increase foreign direct investment, and improve the investment income of Nigerians.

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“Our focus is to create an amazing customer experience, because the more you can service customers in the way they want to be serviced, the better it is in the long term. This is seen in our lower commission rates, seamless onboarding process, best prices. We are focused on giving the buyer the most transparent offer,” he explained.

With a team of technologists and financial professionals working around the clock, Chaka remains on course to continually improve investment offers, and provide better decision-making tools to customers.

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Investment Tips

How to invest in small-cap stocks

Small capitalized stocks according to the NSE are listed companies with a market cap below $150m.

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Foreign investors demand for Nigerian stocks increases to N38.98 billion, Nigerians reveal why they pick their favourite banking stocks

There are two meat-pie shops in a city. One has two locations, while the other is a mega meat pie chain with 100 locations. Assuming they both have the same profit margin say 20% on cost of sales, which meat-pie chain will make more in terms of revenues?

Simple, the 100-location chain will have a higher sales volume and revenues because that chain can sell more pies. However, in terms of which restaurant is growing faster? Well, the answer is the smaller chain. How? The smaller restaurant is able to add say two more shops and grow by 100%, the larger chain can add 20 new location and just grow by 20%. A smaller base can grow faster than a larger base; its math.

READ: With $1 million, a delivery startup could acquire Trans-Nationwide Express Plc 

This is the same for stocks. All things being equal, a company with a lower share price is able to see an appreciation in her share price faster than another company with a higher-priced stock. Look at it this way,  a share price movement from N1 to N2 represents a 100% gain in market price, but a stock priced at N200 per share will need the share price to move to N400 for a similar gain of 100%.

A small capitalized stock will have a faster growth rate than a high capitalization stock because the lower-priced share can double faster than shares of higher-priced high cap stock. This is the lure of smaller capitalized stock; they can post price increases faster than large-cap stocks.

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READ: Global Stocks rise on high hopes for a COVID-19 treatment

Small capitalized stocks (small cap), according to the Nigerian Stock Exchange, are listed companies with a market cap below $150 million. Capitalization is simply the total number of shares issued by the company multiplied by the share price of the stock. As at June 2020, small capitalized stock had a cumulative market value of N971 billion ($2.51bn). Small caps as a sector also outperformed the total NSE ASI index – the small caps returned a negative -6.61%  as compared with negative -18.31 returned by the broad NSE index of all listed stock.

Small caps stock is sometimes termed as growth stock because they still have tremendous opportunities for growth. In our earlier example, the meat pie company with just two outlets can grow to add hundreds of new outlets, thus boosting earning and subsequently the share price. This means when the investor is considering small-cap stock, he is looking for a high growth stock, in this case with a slightly higher P.E. ratio but trading at a price below future earnings. Small-cap investing is trading on price movement, not dividend per say, its trading not on market share but price movements,  It’s a momentum play. Whilst earning is important in setting a future direction for the share process, the investors is focused on price arbitrage to take advantage of mispricing. This makes trading in small caps very risky and capital can be lost.

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READ: How BTC Whales can push BTC market value to $1 trillion

How does investor trade on small cap?

Since the driver is momentum trading driven by daily prices, a key metric to screen with is price movements of 15% band from 52-week price high of small caps (N60b in market caps) with an average 90-day trading volume of 2m shares with a Price Earning ration below 15 and Earning yield above 15%

From my screen, I get these candidates:

  1. Berger Paints
  2. Fidelity Bank
  3. Fidson Drugs
  4. First City
  5. May and baker
  6. Presco
  7. United Capital
  8. Vita form

Again, you can construct your own screen. What is key is to seek out a stock with a market cap below N60 billion, that is constantly trading but selling today at a price below its 52-week high. This pricing can simply be the result of COVID-19 induced slow down. Then buy that stock at a price that is “cheap” hence the lower P.E. Ratio, most importantly, you want to build in some risk management by buying high historical dividend yield stock to ensure if you have to hold, you receive a divided yield higher that the risk-free rate.

Stock trading is risky and you can lose your capital, the stocks listed above are illustrative and do not constitute buy or sell advise.

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