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Are You Prepared for the Next Disaster?

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By Robert C. Byerts

Tornado season is here. Hurricane season approaches. Its always fire season, haz mat release season, and earthquake season, not to mention the constant threat of terrorist incidents.  Are you prepared for the next disaster that could impact your dealership?  If you are not, then take the time now to take the steps necessary to evaluate the risks your dealership faces, plan for managing those risks and the disasters they pose, and for responding when one of those risks actually impacts your dealership. If you do not take the time, your ability to respond to an emergency, recover your business operations, and continue in business, will suffer. Just ask those dealers who weathered Superstorm Sandy, or the Oklahoma tornadoes, or the hurricanes in Florida.

Business continuity planning must account for all hazards (both natural and man-made disasters) which could impact your dealership. You should plan in advance to manage any emergency situation. Assess the risks now, and make a plan for how to handle those risks, if they impact your business.  Common risks facing dealerships include: fire, windstorm (hurricanes and tornadoes), earthquake, flood, hazardous materials release, mass casualty (e.g.- employee shooting, aircraft crash), and pandemic.  As I write this a client reminded me that hailstorms impact dealerships.  Consider the impact of each of these risks, as well as the likelihood of occurrence, at your dealership.  If you are located in California, you better plan for earthquake as well as flood, fire and mass casualty.  On the Gulf Coast, windstorms should be included while earthquakes can be omitted.  While the risks may vary, the impacts may be quite similar.  No matter the origin of the disaster, your plan better address the impacts of too much water, too much wind, and/or fire on your operations.  The impacts, loss of inventory, loss of viable location, and loss of personnel, are common to multiple risks.  Identify the impacts, and the resources you will need to address them.

For any dealership, insurance should be in place for all risks and hazards that could impact your business.  Read your insurance policy.  Do you have flood insurance?  Are you really at risk for flood?  Even though you may not be required to have it is there a realistic risk of flood happening at your location?  If so, get flood insurance. Make sure you know whether windstorm/earthquake/hazardous materials releases coverage is provided.  Consult your insurance professional and evaluate your situation now, before the disaster happens. Review policies to make sure that coverage has kept pace with exposure.  Make sure your business interruption coverage will provide the resources you need to weather the storm.

Identify resources to assist in the preparedness process and in the response and recovery efforts.  Fortify the property, if appropriate.  Obtain back-up systems for computers and understand how that process works.  Make hard copies of essential documents (insurance policies, corporate documents, accounting documents, client records and contact lists should be available to you at an alternate location.  If warranted, obtain generators or agreements to supply generators and other equipment you may need to respond and get back up and running.  Plan for extended power outages.

Write a Crisis Communication Plan. Detail how you will be in contact with employees, customers and others during and after a disaster.  Establish an employee communications plan and system so that you can account for your people and communicate with them.  You will need help to respond and recover.  Involve your employees in your assessment and planning process, so that they can implement the plan.

Prepare a financial recovery plan that includes access to a line of credit.  Insurance payments can be delayed.  Identify tax issues that arise when a disaster occurs: what will you need to claim tax benefits, avoid tax payments and otherwise account for taxable income when the hurricane hits?  Talk to your accountant about methods to preserve essential accounting information, recreate what might be lost, and discovery problems that can and will arise when disasters hit.

Exercise the plan.  You play like you practice, as an old coach often told me.  Conduct a dry run to back up computer files, implement a communication plan, test your systems and ensure you have the necessary tools in place.  Take note of deficiencies and take corrective action.

Planning and preparedness will not only help you survive, it can help you thrive and profit.  After Superstorm Sandy, dealerships that had prepared for disasters were able to get back up and running, and sell cars to all those customers who lost theirs in the storms.  Market shares improved and new customer relationships were formed that lasted well after recovery was completed.  Dealerships that plan and are prepared for disasters can be survivors and out perform the competition after the winds die down or the flood waters recede.  Take proactive steps today to help make sure your dealership is ready to perform.

SUMMARY:

  • Plan in advance to manage any emergency situation. Assess the risks now, and make a plan for how to handle those risks
  • insurance should be in place for all risks and hazards that could impact your business
  • Identify resources to assist in the preparedness process and in the response and recovery efforts
  • Write a Crisis Communication Plan.
  • Prepare a financial recovery plan
  • Exercise the plans