Using DBAs to Expand Your Company's Potential
The Same Company Can Do Business Under Multiple Names
As small businesses mature and grow, they often find that differences start appearing in the clients and customers they serve. This often results in having to market different product and services to different segments in different ways. This can get complicated, particularly if a company has developed their brand in a way that is very successful for a specific segment that may not necessarily translate to other segments.
A way that a company can handle this divide is to use a different trade name. This is commonly referred to as a DBA, or "Doing Business As”. A DBA allows businesses to operate under a name that resonates more clearly with or clarifies a type of service aimed at a target audience. A strong, recognizable name can be a powerful marketing tool that makes it far easier to attract clients seeking specific services.
For instance, The Gap, Inc. started out selling as Gap, but also owns several other brands targeting different segments. These brands include Banana Republic, Old Navy, and Athleta. All are part of the same company, but "do business as" different names with different levels of product quality at different price points.
This is not restricted to large corporations. Brightleaf Consulting Group started out as a strategy consulting company; however, we started providing accounting services shortly after starting out because we found that many small businesses had issues with their books and weren't using them as a management tool. Because people don't necessarily associate accounting with consulting, we registered a DBA as Brightleaf Accounting to more clearly communicate these services. This not only helps in building a distinct brand identity but also aids potential clients in quickly identifying our expertise in accounting.
Operating under a DBA provides legal and financial flexibility. It enables a company to expand its service offerings without the need for establishing a separate legal entity, allowing the company to adapt and expand services while avoiding some duplicative expenses such as a different set of books, a separate tax return, a different office, different IT or telecommunications services, etc.
Because a DBA often targets a different market segment, it often means that marketing efforts will be somewhat different in order to make your services more relatable and accessible to clients. This allows the company to craft tailored marketing messages and branding strategies that align closely with the needs of target clients and to increase client engagement.
From a financial management perspective, a DBA simplifies banking and transactions by using the same bank accounts to process financial transactions under multiple names. This streamlines financial operations and presents a professional front to clients and vendors.
This varies from state to state. For example, filing for a DBA in New York is done at the state level. In California, this is done through the County Clerk's office of the County where the business is located (or in Sacramento County if the business is located out of state). This can often be done online, but some states still require that a paper form is filled out and mailed in.
If you're interested in knowing more or need assistance setting up a DBA, Brightleaf Consulting Group would be pleased to help!
- John Thrush