If you have access to a printer experiment with different fonts, font colors, and font sizes on plain paper for the sign.
In my use of balsa wood to build model airplanes, decals donʻt adhere very well unless the balsa is sealed first, so you could just cut and glue the paper signs on the wood.
If you are going for a weathered look with the wood grain showing through you might try using decal paper which can be purchased for either laser or inkjet printers. The problem there is you canʻt print "white", which can be partially solved by using white decal paper. Printer decal paper tends to be thicker so you might have to use some decal solvent to soften the decal.
My experience with decal paper was mainly working with my father help him to decorate the 1/4" scale RC planes he loved to build and fly, so the size was much larger than O Gauge.
Here is photo of my dad and his camera plane, which had a film camera mounted inside with remote controlled shutter mechanism. When one of his buddies "lost" a plane in the swamp surrounding the flying field, he would take off, fly a grid snapping photos, and after a trip to the one hour film processor, and they would mount a search and retrieval effort.
Sorry for digressing, must be Sunday morning.
The "AERIAL RECOVERY" text on the plane was done with clear decal paper. The larger N267 and striping was done with Monokote.