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The 21st century has taught us to be ready for almost everything and anything. Society in general, and auto dealerships in particular have survived 9/11, a devastating financial crisis, COVID, along with various hurricanes, floods and fires.
You are a survivor... but it's never easy!
While we are recovering from the CDK attack, we do well to be thinking ahead for the next possible disaster and the business interruption it is sure to spawn.
Auto dealerships, like many other businesses, are vulnerable to various disruptive disasters, both natural and man-made. Each type of disaster can have a sudden and devastating impact on the business, making advanced planning critical for mitigating risks and ensuring swift recovery.
Here’s a look at the different kinds of disasters and their potential effects:
Natural Disasters
1. Hurricanes, Tornadoes, and Floods
2. Earthquakes
Man-Made Disasters
1. Fires
2. Cybersecurity Attacks
3. Workplace Violence
4. Chemical Spills and Environmental Hazards
5. Local or OEM Labor Strikes
The Imperative of Planning Ahead
The sudden and severe impact of these disasters underscores the importance of proactive planning. Without a well-thought-out disaster preparedness plan, auto dealerships face significant risks to their operations, finances, and reputation. Advanced planning helps to:
Ensure Business Continuity: By having contingency plans in place, dealerships can quickly resume operations, minimizing downtime and financial losses.
Protect Lives and Assets: Effective emergency response plans prioritize the safety of employees and customers while also protecting valuable assets.
Enhance Resilience: Preparedness measures enable dealerships to respond more effectively to unexpected events, fostering resilience and long-term sustainability.
Risk Assessment and Preparedness
Identify potential risks specific to your location and dealership.
Develop detailed plans for various scenarios, including fires, chemical spills, bomb threats, and natural disasters.
Designate safe areas for shelter during events like tornadoes and ensure evacuation routes are clear.
Establish protocols for lockdowns in case of violent incidents.
Cybersecurity Measures
Implement robust cybersecurity measures to protect dealership data.
Regularly update and test cybersecurity protocols, including plans for data backup and recovery.
Insurance Review
Annually review insurance policies to ensure adequate coverage for all potential disasters.
Verify that the valuation of assets, including buildings and inventories, is current.
Human Impact Management
Maintain a current list of employee contact information, including phone numbers and email addresses. Store this information securely on the cloud and ensure it is accessible off-site.
Practice mass communication strategies, such as text messaging, to quickly inform employees of the situation.
Assign department managers to check on employees' well-being post-disaster and provide assistance if needed.
Designate a communication line for employees to report their status and needs.
Pre-assign roles for protecting dealership assets, such as securing data, titles, and finance contracts, and shutting down critical systems.
Understand federal and state laws regarding employee leave and termination to avoid legal issues.
Develop a payroll backup plan to ensure continuity in case of system failures.
Property and Asset Protection
Stock up on essential supplies such as potable water, batteries, and backup power sources.
Keep tools like chainsaws, shovels, and tarps readily available.
Ensure the availability of generators to maintain operations during power outages.
Implement off-site data backup solutions to safeguard critical information.
Prepare to move or protect computers and other sensitive equipment from potential damage.
Secure cabinets and unplug electrical appliances to prevent damage during a disaster.
Maintain a site map indicating shut-off valves for utilities and the location of fire extinguishers and first aid supplies.
Regularly inspect and clear roof drains to prevent flooding.
Have a plan to protect windows and doors in case of severe weather.
Inform local law enforcement if the facility will be unoccupied or if security guards will be present.
Business Continuity Planning
Keep an updated list of suppliers, equipment vendors, and contractors to facilitate quick repairs and replacements.
Understand the terms of your business interruption insurance to ensure coverage during downtime.
Maintain a sufficient line of credit to manage cash flow disruptions.
Prepare manual workarounds for essential business functions, such as paper write-up sheets for service departments.
Keep “Open for Business” signs ready to signal readiness to resume operations.
Stay informed about federal aid and tax relief programs available post-disaster.
Apply for all available support to mitigate financial losses.
Continuous Improvement
Regularly review and update disaster plans to adapt to new risks and improve preparedness. Conduct annual reviews of insurance policies and emergency plans. Regularly practice and refine communication and evacuation drills. Update and secure all necessary documentation, including site maps and employee contact lists.
By implementing these strategies, dealerships can better prepare for future disasters and ensure a more effective and efficient recovery process.
This post was adapted from just one chapter of the DealersEdge/Profit Blueprints Accounting Guide. The Chapter focused on how you can prepare now for the unexpected. Being unexpected, does not have to mean you are unprepared.
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