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Thursday, 10 April 2014 1:32

How Poor Planning and the Wrong Name Can Kill Your Business: A Look Back At the “.Com Bust”

By - Michael Rader

For thousands of entrepreneurs, investors and business owners, the “.com bust” of the early 2000’s came on fast and powerful, leaving many scratching their heads wondering what went wrong. As the internet craze began to take shape in the 1990’s, venture capitalists raced to fuel internet based companies in hopes of getting rich overnight. For startups everywhere, this was a dream come true, and many of them incorrectly assumed, a free ticket to success.

What went wrong? Well, for one thing, a high public profile is no substitute for strong fundamentals, a proven strategy and a solid business plan. But it’s more than that, because even something as simple as the wrong business name can do damage. Here’s how poor planning, along with a descriptive, boring and unoriginal name, can kill your business.

A Descriptive .Com Extension Is Not Enough

In the 1990’s, as the internet craze broke, venture capital funding for startups was everywhere and prospective business owners didn’t have to take the time to prepare a solid case for their ideas. It was as if a “strong” .com domain name alone were enough to secure funding. In fact, amped-up investors with dollar signs in their eyes were willing to overlook traditional business metrics and other fundamentals of a sound investment strategy expecting that all Internet based companies would turn a profit.

In light of easy funding, many startups thought this was their chance to hit it big without having to strategize or show investors any proof of a solid plan at all. In fact, many entrepreneurs thought they could simply take a descriptive name like pets or toys with the .com extension and the rest would fall into place., etc. are examples of companies who were looking for overnight success through a strong descriptive .com extension. With no background analysis on the industry, insight into profit margins or even real staffing, Internet based companies simply popped up out of thin air with a descriptive .com extension and a smile.

New hopefuls weren’t the only ones, because even established businesses changed their names, adding the .com suffix in hopes of getting rich quick. Unfortunately, businesses at the time were more interested in attracting consumers to a website rather than building relationships and trust over time for slow, steady growth. The Takeaway? A descriptive business name alone does not make a business and as we have seen many times over, even using the strongest, well known dictionary words for your business name is not enough to create a brand of legitimacy.

Startup Success Demands All Things Considered

Today, and in light of the failures of the 1990’s, savvy entrepreneurs now understand there are many factors that go into starting a new Internet business beyond securing a keyword rich .com domain.

If a new business is to have any chance of success, it needs at a minimum, solid business strategy. Strong businesses also need to spend time looking into their market and their competitors; they must analyze product cost and margins; explore promotion and marketing opportunities; and yes, they must give tremendous thought into the name of their business. Startup success demands that all things are considered, from strategy to operations and funding to the business name.

The Right Business Name Builds Credibility, Authenticity and Trust

The problem with overzealous startups in the 1990’s was twofold. Not only did many of them neglect to put the effort into showing potential profitability over time, but they also failed to see how something as simple as a business name could have so much impact. Years later, we have come to realize that a business name is more than a few letters on a page, or in the case of the .com bust, a direct link to success.

The right name is a reflection of your brand. It’s who you are as a business and who you claim to be to the consumer. A name is more than a .com extension, but memorable, unique and emotive. And most important, the right brand name builds credibility, authenticity and trust.

Business professionals and scholars looking to understand the dynamics of the Internet craze and the role it played in the ultimate demise of many startups will forever cite the .com bust of the 2000’s. Years later, we are reminded that true success, business longevity and credibility rarely come out of a keyword descriptive .com extension, but through thoughtful planning and the use of a true brand name.

Starting and growing a business can be challenging, and competitive advantage does not happen by chance. Startup success comes from building your brand slowly and consistently. Make a plan and choose a distinctive, brandable name that will grow with you, one day at a time. For a marketplace of high quality, brandable names, be sure to explore Brandroot and secure your first impression strategically, not by chance.

Last modified on Thursday, 10 April 2014 2:26

Michael Rader

With over ten years in web development and design, Michael Rader has expertise and technical know-how. But more than a skilled technician, he is an entrepreneur and innovator who helps startup’s and new businesses identify and define their future with a unique, brandable business name. Michael Rader is the founder and CEO of Brandroot®, a leading .com domain name marketplace. He currently lives in Kailua-Kona, Hawaii where he operates the business and authors a blog dedicated to naming and brand name establishment.