Signs and Business Development

The following article originally appeared on the Small Business Administration website in February 2001, but it was subsequently removed.

The vast majority of the following information comes from what was formerly posted on the Small Business Administration website, beginning in 2000 in the “Starting Your Own Business” section. You can read how it occurred at, some egos in sign-industry leadership irked the SBA, and it was taken down. Ideally, sometime in the near future, similar information will again be posted on the SBA website.

Why do I need a sign for my business?
What is the most effective signage for my business?
Do I need a lighted sign?
What should my signage say?
How do I effectively “brand” my business location?
Is signage expensive?
How can I determine whether my current sign is effective, or what should be changed?
What are some of the alternative payment methods for signs?
Should I buy or lease a sign?
How do I choose a sign company?

Legal Rights:
What legal rights do I have as a sign owner?
What are my legal obligations?

Why do I need a sign for my business?
There are many reasons, the most primary of these being:

    • Signs are the most effective, yet least expensive, form of advertising for the small business.
    • A sign is your introduction and handshake with those passing by, identifying your business to existing and potential customers.
    • Signs are always “on the job” for you, advertising 24 hours a day, 365 days a year.
    • People often judge a business by how it looks on the sign.
    • Many merchants increase their business measurably just by adding a good sign. Conversely, many have gone out of business because they simply were not identified well, so not enough potential customers knew of their existence. As one sign industry professional put it, “A business without a sign is a sign of no business.
    • We live in a mobile society. According to the United States Census Bureau, 18% of households relocate each year. As your customers move, you need to replace them by attracting new customers.

For additional information, please review the “Understanding the Value of Signage” section.

What is the most effective sign for my business?
The answer here will vary somewhat, depending on your business, location and other factors. In general, following these guidelines will increase the effectiveness of your sign.

    • The best sign for your business is a sign that will attract the most customers and project the image you desire.
    • Your sign must be visible and easy to read for people who are driving and walking past your business.
    • Your sign must be attractive and appropriate for your type of business.
    • A sign will serve to remind existing customers of your business and location, and provide new customers with a valuable visual indicator about the products or services you offer.
    • Your sign should be as large as allowable for your location.

Additional in-depth material is available in the “Design Tips” and “Evaluating Your Business Location’s Signage Needs” sections in the “Obtaining Your Signage” section.

Do I need a lighted sign?
Yes, we no longer live in a 9-to-5 society, and people will drive past your business location 24 hours a day. With a lighted sign, you have an opportunity to communicate with your existing and potential customer, even when your business is closed.

Large corporations create “top of the mind awareness” when they constantly and consistently present their name, corporate logos and products until their name becomes a household word and their corporate logos or graphics become synonymous with the corporation’s name. With a lighted sign on display 24 hours a day, the small business owner has the opportunity to create a “top of mind awareness” in their local community. (See the related question about ‘branding’ a location.)

Additional discussion about lighted or illuminated signage is available on the “Lighting and Illumination” page.

What should my signage say?
A successful sign will communicate effectively and concisely. Therefore, here are some general guidelines:

    • In as few words as possible, clearly communicate what you are selling.
    • A picture depicting your product or service adds impact and clarity.
    • Present the image you want to project that will attract customers and entice them to stop, shop, and buy.
    • Determine the best sign type, size, colors, and placement, keeping in mind what the sign will look like from the street and sidewalk. The proper design of your sign is critical to its effectiveness.
    • Crowding the sign with too many words or lines of text makes it impossible to read from a distance. Use as few words as possible. In general, not more than 5-7 words, with 3-5 being ideal.
    • Don’t try to sell your customers with the sign — save that type of information until they are in your place of business.

People are looking through a windshield, in traffic, day and night and in all types of weather. Help your customers both see and read your sign easily.

How do I effectively “brand” my business location?
As a business owner, one of the primary goals of your signage is to create “brand” recognition for your business in the community. National companies use their signage, architecture, and logos in every type of advertising they do, thereby reinforcing their corporate image and creating a “top-of-the-mind awareness” with consumers worldwide.

To do this, use your company logo or graphic on all of your signs, stationery, uniforms, company property, vehicles, etc. Repeated viewing of your company’s logo, especially on your sign, will help “brand” your business and location, and create “top of the mind” awareness for your existing and potential customers.

Is signage expensive?

  • Signage is the least expensive, yet most effective, form of advertising for independent and national retail businesses.
  • You pay for the sign once and it works for you 24 hours a day, 7 days a week for years. Use of other media requires paying month after month, and you never have the benefit of ownership. You also have no assurance that you’re reaching potential customers.
  • From a business owner’s perspective, a sign should not be viewed as an expense, but as a capital investment. When you factor in your return on investment, signs are not expensive. An effective sign will most likely pay for itself many times over.
  • The price for signage will vary greatly depending upon the size, design, style, manufacturer, and mounting type.

How can I determine whether my current sign is effective, or what should be changed?
As with measuring a new sign’s effectiveness, evaluating your existing signage will require assessing readership. Sign companies often offer this service, however you can also conduct simple “customer surveys” in which you ask your customers a series of questions about your existing signage, such as the words, colors, and size, and whether they can even recall what it looks like from memory. Open discussions like this, with your customers, will provide valuable insights. You may discover that customers remember the graphic or image on the sign, but not the business name, or maybe it’s the color that stands out in their memory. Listen closely and carefully, because these are answers that can help you determine not only the effectiveness of your existing sign, but also suggestions about what you might do differently with a new sign.

Tip: Remember to thank your customers for their time and input after the survey with a tangible item that further reinforces your business’ product or service. You might extend a discount for future services, or present them with a gift related to your business (a mouse pad from a computer store, a coupon for the daily special from your cafe, or similar).

What are some of the alternative payment methods for signs?
In general:

    • A deposit of 20-50% of the total sign order is usually required when you place an order, with the balance paid on completion.
    • You may be able to lease the sign on a lease/purchase. Many sign companies have arrangements with a lease company. (See the “Should I buy or lease a sign?” question that follows.)
    • Signs are eligible for inclusion in business-asset loans, including all normal SBA programs.

You can arrange for the sign to be financed through your bank or other lending institutions; however, you might need to make these arrangements on your own. Some sign companies will involve themselves with or arrange for the financing, but you’ll need to ask.

Should I buy or lease a sign?
The decision to buy or lease is a business decision. Consider the following when determining your answer:

    • As a business owner, consider all of your options, which may include cash payment, financing, or leasing.
    • Some business owners prefer leasing to purchasing to reduce their cash outlay. Leasing enables you to preserve your working capital for inventory, labor, and other normal costs of doing business. A normal lease will result in perpetual monthly payments, you never own the asset. There are leasing options structured with a final large payment to “buy-out” the lease and gain ownership of the asset.
    • If you have the available cash, you could purchase the signage and avoid the additional expense of paying interest, and you avoid any monthly cash-flow requirements.
    • Bank financing, particularly if you include other assets, will result in the lowest monthly cash flow. Signs are assets eligible for inclusion in SBA loans.

How do I choose a sign company?
You comparison-shop for other products or services, and a sign is no different. There are several initial approaches, including reviewing examples of their work, speaking with their references, and doing your research.

Then, consider as you would with any vendor:

    • the quality of the signs offered
    • the sign company’s ability to design and deliver a sign that fits your needs
    • the product knowledge and experience of the sign company’s personnel
    • the price, quality and value offered
    • the follow-up and ongoing service provided

What legal rights do I have as a sign owner?
In summary, you have the right to display a sign that conspicuously and legibly identifies your business. Your right to business identity is protected by the United States Constitution, federal laws, state laws, and important legal principles established through litigation. Briefly, these protections include:

    1. The United States Constitution – the First, Fifth and Fourteeth Amendments (Additional detail is provided in the “Legal Considerations” section through the link provided below.)
    2. The Highway Beautification Act. This act regulates the location and types of signs that are allowed along the nation’s highways.
      • On-premise business signs and electronic variable message signs are among those exempted in the Act.
    3. The Lanham Act. A federal act that deals with trademark protection.
      • A federal appeals court in California has interpreted the Lanham Act as prohibiting a city from requiring that a federally registered and protected logo mark or name on a sign be altered as a condition of approval for a sign permit. As a result, in nine western states — including Arizona, California, Nevada, Oregon and Washington — a city or county may not force the user of a registered trademark to change the color, typeface, or design of the mark to comply with local ordinances or design criteria. However, the federal appeals court for the states of Connecticut, New York and Vermont has interpreted the Lanham Act as allowing local-government sign codes in those states to require the alteration of a federally protected mark. Outside of the states mentioned, the law is still unsettled on this issue, and a business owner who is asked to alter the federally protected mark on a sign should contact legal counsel.
      • There are also state trademark laws that offer similar protections in varying degrees.<
    4. Copyright and patent protections. Your original ideas (i.e. logos, sign design, etc.) can and should be legally protected by copyrights and patents, as appropriate.

What are my legal obligations?
You should be aware of several legal obligations that may affect your sign, including, among other things, permits, copyrights, patents and trademarks, building and electrical codes, local zoning or sign codes, and perhaps other regulations. These will vary depending on many factors. Due to the nature and detail of legal obligations, be certain to review the information located in the Legal Considerations section.


Photo by Austin Chan on Unsplash

Wade Swormstedt

Wade Swormstedt

Wade is the former Executive Director of the Foundation for the Advancement of the Sign Industry and the former Editor and Publisher of Signs of the Times magazine.

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Posted in 1st Amendment / Freedom of Speech, Copyright Protection (Lanham Act), Electronic Message Centers, Sign Codes, Signs' Advertising Value, Small Business Administration, Supreme Court.