innovate arkansas

Barry Pelts, managing partner for the Ruth's Chris Steak House in Rogers, said the Ruth's Chris name will generate about half of the eatery's annual revenue.

"I estimate that about 40 percent of our sales will be from name recognition alone," Pelts said. "Ruth's Chris is an established and proven name. People know what they are going to get when they come to our restaurant."

But business owners like Jeff Nugent, owner of Hog's Breath Eatery, prefer to take the independent route because it allows him to make decisions that are best for his restaurant.

"A lot of people prefer hometown food over franchised food," Nugent said. "I get customers who come in because we aren't a franchise and we are different than the others."

Franchises account for half of all new businesses started in the U.S. each year, according to the U.S. Small Business Administration. But that statistic means another 50 percent or so of all new small businesses are free of corporate strings. Both types of businesses have their place in the capitalist system, consultants said, it all boils down to preferences and a willingness to shoulder the responsibilities found on both sides of the fence.

Thomas Jensen, head of the Walton College of Business department of marketing and logistics at the University of Arkansas, said consumers are creatures of habit and brand recognition often plays into their purchases.

There are businesses devoted to helping entrepreneurs find the right name for their business and equations that help analysts find the power of a name.

Consumers deduce a lot from a business's name. If managed correctly, a brand can create demand for a business's good and services.

Buying Brand

According to the International Franchise Association's Educational Foundation franchised companies added about 30,000 new establishments and over $1.53 trillion to the U.S. economy in 2006.

"Buying into a franchise is essentially buying an image and the consistency of a proven brand," said Ryan Osborne, CEO of Buckner Osborne & Associates in Fayetteville. "You pay for a known and established name."

A report issued by the International Franchise Association's Educational Foundation noted that there are over 3,000 established franchised brands that span 230 different lines of business.

A franchise can help first-time entrepreneurs learn the ropes of a business, but proven names and business plan come at a price Osborne said.

Most franchised businesses require around $30,000 up front for start-up costs. Franchisees then have to continue to pay an average of 3 percent to 6 percent of their annual gross sales to the franchiser corporation. An additional 1 percent to 2 percent of revenue is also usually expected for national marketing and placement of ads.

Chris Taylor, owner of Synergy Business Services in Bentonville, said he often recommends franchises for those that have very little business acumen.

Russ Gunnell bought into the Fleet Feet franchise in 2001 and said the company's support has helped him build better vendor relations and find new avenues to promote his business.

Gunnell said Fleet Feet, a retail running shoe store, was a fairly new company, with only a dozen or so stores across the country, when he first opened his shop in Fayetteville but as years have passed Gunnell has seen the payoff.

The partners of Solomon Partners commercial real estate firm in Bentonville, recently became part of a national organization.

Becoming part of Grubb & Ellis Co., which has over 66 local affiliates across the U.S., Barrett said, has given the company a nationally-recognized name and a network that allows them to interact with brokers throughout the country.

"People from larger markets across the county looking to invest in Northwest Arkansas recognize our name," Barrett said. "Grubb & Ellis has a great reputation and that has only benefited us."

Business owners operating under and established name are also more sought after by developers and building owners.

Fayetteville developers Hank Broyles said every developer wants to bring in a business with an established name.

"Known names help attract customers to the development," Broyles said. "Other stores in the development can then feed off of that traffic."

Osborne said franchised businesses reduce the learning curve for customers. Franchisees can often post a profit much quick than independent business owners.

"Everyone is different and franchising isn't for everyone," Jensen said. "But it is a much safer bet than going it on your own."

Brandi Rushton, owner of She Said Yes Bridal & Evening in Rogers, doesn't have a corporate support system. She must rely on her own business savvy.

Having a marketing background Rushton said she knew branding her name and her image were an important aspect of helping her business succeed.

"Brand identity is very important to me," Rushton said. "There are dozens of other bridal stores in Northwest Arkansas. I have to let customers know why I am different."

Rushton said she looked into establishing a franchise but found there were few options in the bridal wear industry.

After four years in the business Rushton said she is glad she started her own shop because she is the one calling the shots and making the decisions, not a corporate office.

Ron Hundall, CEO of Resource Design in Rogers, said branding is the most important aspect of starting any new business because it allows customers to remember and attach themselves to a name or brand.

Selecting a business's name is the first step in that process.

While there is no formula for finding the right name there are some definite dos and don'ts.

Broyles said he always thinks about any connotations, good or bad, that could be associated with a name, word or phrase.

Using a name that is associated with a product or service lets customers know exactly what a business offers. But it often makes it hard for business owners to expand their product line.

If business owners choose to use an arbitrary word or name for their business they must spend more time and money educating consumers on what they sell or provide.

Through the branding process Hudnall said business owners have the ability to take any name and make it their own.

Eddie Haskell's Patio and Grill owner Jeff Cooper recently enlisted Resource Design to help him translate an iconic name into a successful restaurant and bar.

"When you say Eddie Haskell, you don't think food," Hudnall said. "But through branding we were able to jump on the two faces of Eddie Haskell and brand the restaurant as having two sides, food during the day and spirits at night."

Building name awareness and displaying a business's name as many places as possible allows business owners to discretely send messages to their consumers.

"You need to communicate, communicate, communicate," Jensen said. "Build name awareness through advertising, branded items, napkins, uniforms, anything you can put your name on."

The branding process does take an investment of time and money but done correctly Hudnall said it will pay dividends for the rest of your business's tenure.

Creating Success

The U.S. Small Business Administration reports that only two-third of all business make it past their second year in business and only 44 percent will see their fifth year anniversary.

Business owners have to create a unique look and experience to distinguish themselves in today's crowded market, Osborne said.

Finding a unique name and creating a solid image go a long way in helping business owners get their grip on the ladder of success.

"The business' name is the first thing customers see and hear," Jensen said. "Your name delivers a message to the consumers. You want to make sure they carry that message with them, and hopefully pass it on. It will go a long way in helping your business succeed."

Lasting Logos 'Key to Recognition'

The golden arches, a red target and the simple black swoosh all deliver a message without saying a word.

They allow companies to send an instant message to their consumers.

McDonald's, Target and Nike are just a few of the hundreds of national corporations with logos that have become as recognizable as the businesses they represent.

Ryan Osborne, CEO of Buckner Osborne & Associates in Fayetteville, said he recommends all businesses adopt a logo from the start.

"I love logos," Osborne aid. "It's a business's entire brand identity, all summed up in one mark or graphic."

Logos cannot replace names for young businesses but after years on the market many business owners can begin drawing as much revenue from their logos as they do from their name.

According to research from Nike Inc., the company generates millions of dollars in revenue annually from its little black swoosh.

Ron Hudnall, CEO of Resource Design in Rogers, has helped hundreds of businesses improve upon or design their own logo.

"Businesses have to build a brand image before they use a logo or secondary mark but a good logo can give a company range and tons of new possibilities."

It is important, Hudnall said that logos retain the company's image and remain consistent across stores and merchandise.

A logo must use the business's colors and have the same look and feel. Osborne said he often recommends incorporating a business' name into the logo.

Because logos are an important part of a business' marketing campaign, Chris Taylor, owner of Synergy Business Services in Bentonville, said he advises all of his new business owners to have their logos professionally designed and printed.