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The Case of the Brothers Grimm

A sign company’s relationship with a demanding client is no fairy tale, leaving its owner contemplating a difficult dilemma.

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RONNIE ZELDO WAS A big shot in the swank town of West Hartvale where he controlled over two million square feet of office space and a few hundred apartments. His dad had bought large parcels of commercial property in town back in the 1960’s and built or improved one building after another to accommodate residents and businesses fleeing the atrophying downtown and neighborhoods of Hartvale, a once-proud, bustling metropolis. After graduating from business school, Ronnie joined his father’s real estate empire, cutting his teeth first as a property manager, later as vice president of operations, and finally as numero uno upon his father’s retirement.

During the transition, Nicky Zeldo, Ronnie’s younger brother, assumed the reins of VP of operations, a title once connoting “next in charge,” though now redefined to “lead punching bag” at Zeldo Real Estate Management (ZREM). Ronnie would often hurl half-taunts and cynical witticisms at anyone in his presence, including employees, clients, vendors and especially his younger brother, Nicky.

Located a few miles down the main drag from ZREM, Sygmoid Sign Co. was known for dazzling designs and impeccable fabrication. Over nearly 40 years, they had established themselves as the area’s go-to sign company for top quality, professionally designed signs. As a result, the company’s art department remained perpetually busy.

ABOUT REAL DEAL

Real Deal scenarios are inspired by true stories, but are changed to sharpen the dilemmas involved and should not be confused with real people or places. Responses are peer-sourced opinions and are NOT a substitute for professional legal advice. Please contact your attorney if you any questions about an employee or customer situation in your own business.

ABOUT THE AUTHOR

LAWRIN ROSEN is the president of ARTfx (Bloomfield, CT). Email him at [email protected]

Through the years, Ronnie Zeldo had always recommended Sygmoid to his friends and associates and had thrown quite a few jobs their way… but always with a catch — tons of complementary design to which he felt entitled. His demands were often in flux. Nothing was ever quite finite. If he was not 100% happy with a shape or color, then one of his architects or interior designers was ready with a running critique. Even if Ronnie and his design cronies liked a particular concept, he usually wanted to see two or three more, strictly for comparison’s sake. And when he finally settled on a design after soliciting dozens of outside opinions, it was invariably accompanied with a wisecrack like, “Not bad for a five-minute doodle — ha ha ha!”

To make matters worse, communication between ZREM and Sygmoid usually started with a phone call, text or email from Nicky, a guy not gifted in idea conveyance. One day Nicky called Sygmoid for what he claimed to be an urgent matter. He requested to speak directly to the owner, Bob Catskill. “I’m sorry Mr. Zeldo, Mr. Catskill is in a Zoom meeting,” Catskill’s assistant explained, “but he can call you in about 15 minutes.”

“Sorry, Shelly, that ain’t gonna work,” Nicky shot back. “You-know-who is flaming, and my ass is grass. I need to speak with him now.” After a pause, Shelly agreed to pry her boss out of the meeting with an urgent text. Catskill excused himself from the meeting to pick up the phone. “Yeah, Nicky, it’s Bob. What’s up?”

“Hi-ya Bob,” Nicky replied. “Mr. Bigshot is freakin’ steamin’. That banner your guys put up on our headquarters yesterday is flappin’ in the breeze. And, as usual, I look like an a-hole because he says I should have insisted on some product called ‘mesh.’ Whaddo I do?”

“Alright Nicky, I’ll get a guy on it ASAP,” Catskill answered. “Don’t worry, and tell Ronnie to relax.”

As the Zoom meeting was wrapping up 15 minutes later, Catskill’s assistant ran into his office. “Bob, Herman is over at Zeldo’s,” she said. “He says there’s nothing wrong with the banner.”

“You have to be kidding me,” Catskill said. “Something’s going on.” He wasted no time calling Nicky on his cell phone. “Nicky, Herman, our serviceman, says there’s nothing wrong with the banner.”

“Oh, damn. I am so sorry Bob,” Nicky offered. “It turned out there was some type of plastic bag that got caught up in the banner, and Ronnie thought the thing was flapping. I climbed a ladder myself and yanked the damn thing out.”

Bob Catskill is a calm man. His employees are always amazed at his ability to keep his cool — even in the most dire of circumstances.

However, just after convincing himself to shrug Nicky Zeldo’s lunacy off, a nasty email from Ronnie Zeldo appeared on his cell phone.

“Bob, what have I ever done to you? Last year, I gave Sygmoid somewhere in the neighborhood of $150,000 worth of sign work, and just now your art director emailed that I should expect an invoice for designing the signs for my cigar boat?!”

Alone in his office, Bob Catskill blurted out a two-word response that started with ‘f’ and ended with ‘u.’ Fortunately, this unusual departure from his typical low-key demeanor seemed to cool him down.

He sat back down at his desk and pulled up the invoice. It was for $500. Shaking his head, Catskill opened the email from Ronnie Zeldo, and after a moment’s pause, he clicked to reply but, before writing a single word in response, he attached the invoice.

“I’ve got to change the way I handle the Zeldo boys and ZREM,” he thought to himself, as he began to type. “The Zeldos give us a lot of work, but they’re a handful… ”

The Big Questions

  • At what point is it okay for a business owner to stop providing freebies to a connection who has helped get them a lot of business over the years?
  • Then, if you decide it is time to end the freebies, how do you do it?
  • Finally, how do you avoid getting into that same situation in the future?
Chris P.
Hopewell Junction, NY

I would hide the design fees in the cost of the signs. If they notice the increase, tell them cost of materials and labor (art department/designers) has gone up. Then if they go somewhere else to get their signs, the service probably will not be as good. Let them go. Don’t sell yourself short to bullies; it’s not worth the money. You can put that time into jobs and customers that appreciate you more.

Shawn K.
St. Louis

A firm boundary needs to be set, but someone who sends you $150k worth of work can’t just be dismissed. I might try offering a larger job up at cost with the clear message that things have to be handled correctly on the books in the future, and that while their business is important, the time your designers spend on jobs and the materials used are real dollars to your company, not just favors. To sweeten things up and hopefully get their continued business, I might offer a credit/discount system, sort of like, “For every $1k you send my way, I’ll tack on $100 of credit to your account.” This shows respect and value for the customer while still making invoicing for the cost and applying discounts later the norm. If this isn’t successful, I might show the customer what they have been charged vs. your costs vs. book price to show how much favorable treatment they have been given.

Keith W.
Whitby, ON, Canada

Clients that provide long-term steady business expect the world, and don’t like paying market price for developing ideas. In 35 years of experience, I have found that clients are resistant to design time, but they don’t know what the production costs are for making the final signs. As such we have increased our margins on production and install, easily justified by telling clients the raw materials and overhead have escalated, then reduced the design time to a token rate. As clients have the habit of asking for excessive time on design, we recover those costs as an overhead cost instead of an upcharge. No more arguments from the clients. Since our design staff are full-time employees, we can easily calculate the overhead cost of design time. In essence, it’s a necessary cost one way or the other. Clients who supply production ready artwork get a discount. I always hated trying to collect design costs as a separate line item; it is the one thing clients will always argue about.

Steve T.
Maryville, TN

I would tell my client I appreciate the business he gives me, [but also], “I have a lot of overhead that must be meet. I can’t continue services without invoices. I also have other important clients that I need to provide services to. I will get to your needs as soon as I can.” I stopped doing work for a local realtor because he thought that he was the only one important. He was too demanding. It was only $15,000-$20,000 a year, but I’m [making] payroll and [issuing] invoices every month. If he goes somewhere else, the next company may not be as experienced, and [he may] come back.

Jeffrey B.
Winnipeg, MB, Canada

This sounds exactly what happens to us day in and day out. We have been a staple in the sign business in Winnipeg since the early 1970’s. The sign business is a marathon, not a sprint. You will need the repeat business. Understanding where you can “find” a few extra dollars for “the last freebie” is important. Making the customer feel special is even more important. They can “afford” the freebee, but often it is this “gesture” that ends up running miles for you in the long run.

Jim N.
Seymour, IN

We all have a “Ronnie!” Appreciate all of their business from over the years. Simply discount the design work. The “silver snake” in Sygmoid Sign’s client list is ZREM. Plenty of customers past, present and to come in the future of this advertising sign business!

What’s the Brain Squad?

If you’re the owner or top manager of a signage and graphics company in the US or Canada, you’re invited to join the Signs of the Times Brain Squad. By taking one five-minute survey each month, you will receive access to some of the industry’s freshest data on sales — including your fellow members’ comments on what’s selling and what isn’t — and can make your voice heard on key issues affecting the sign industry. Sound good? Sign up here.

Lawrin Rosen founded ARTfx Signs (Bloomfield, CT) in 1983. The company focuses on artistically based production of signs, awnings, architectural elements and corporate art. Contact Lawrin at [email protected].

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