How to name a new company? Experienced entrepreneurs play on emotions.

New entrepreneurs want names that are simple and refer to their product or service.


Illustration:

chris gas

When it comes to naming a company, new entrepreneurs are all business, but experienced ones go by gut feeling.

When coming up with a name for their first company, entrepreneurs come up with names that emphasize what they do as a company, a practice called cognitive naming, according to research by Yuval Engel, an assistant professor at the University of Amsterdam. More experienced entrepreneurs tend to use names that resonate with people’s feelings or emotional names, Professor Engel finds.

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He reached his conclusions after comparing the naming strategies of a group of eight novices and a group of eight experienced entrepreneurs. When asked to think of a new software company name, new entrepreneurs said they wanted names that were simple and made reference to the product or service, while serial entrepreneurs said they chose names that were aspirational or could create excitement among investors.

So, to highlight the company’s flagship product, a digital simulation of entrepreneurship, the new entrepreneurs came up with names that alluded to “game” or “software”, or described what the product did, such as “Cashflow Simulator” . Serial entrepreneurs relied more heavily on emotive names, like “Be your own boss” and “CEO.”

What type of name is more effective? The study, published last year in the Journal of Small Business Management, didn’t cover the question. But Professor Engel says that previous research has shown that emotive names have benefits, including higher evaluations from customers and stakeholders. Among other things, names that evoke emotions tend to work better because they can unconsciously strike emotional chords, he says.

“Novices are not entirely sure what they are doing,” says Prof. Engel. “Experts have learned something along the way about what moves people.”

Ms. Dizik is a writer in Chicago. You can reach her at reports@wsj.com.

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