Article

Hope for the Best, Prepare for the Worst

October 2008, Auto Dealer Today - WebXclusive

by Ryan Linnehan - Also by this author

I have yet to see a guy wandering around town wearing a sandwich board painted with the words, “THE END IS NEAR.” Though all the wars, earthquakes and other disasters going on in the world around us do get your attention. So while none of us knows exactly when the end is coming, I think we all agree that until that time, we want our business to survive and thrive!

Just think of all the disasters or potential disasters that we have either experienced in person or seen on the news in recent years: tornadoes, wildfires, tsunamis, earthquakes, hurricanes, blackouts, flooding, terrorism, gas rationing, food shortages, flu pandemics, ice storms, recessions, droughts, and bank failures. And those are just some large-scale disasters. A local factory closing or a building fire could be just as devastating to a buy here pay here dealer.

While no one really enjoys dwelling on thoughts like this, it is important to determine some contingency plans in the event of a worst-case scenario. I would encourage you to take a couple of hours to sit down with key members of your team and think through what steps you would need to take to ensure the continuation of your operation in the unlikely event of some possibly disastrous scenario.

To be honest, it can be a sobering meeting, and one to which no one will probably look forward. As a matter of fact, the easy thing to do is just put off having the discussion, cross your fingers and hope such disastrous events never occur. However, the easy thing really isn’t the most prudent. After all, we are much better off making these plans now rather than trying to figure it out on the fly the morning after a disaster hits. Obviously, the scope of the disaster will impact your decisions as well, but here are a few conversation starters to get you rolling:

If we unable to use our current facilities, where could we relocate our staff and continue operating? What would we use for telephones? How would we process payments? Where could we relocate our vehicles if necessary?

Do we need to purchase a generator in case of a prolonged power outage? If so, which computers should be hooked up to it, and what other critical functions will need power?

How recently have we backed up all of the data in our system, including payment histories, collector notes, accounting entries, etc.? Do we have redundant backups in case one fails? Do we have backups stored off site? How soon could we get replacement hardware if we are faced with a catastrophic event? Do we have supplies on hand to operate without computers in the interim?

Does our insurance cover us for business interruption? How about for replacement of damaged equipment or inventory? Any reimbursement for loss of business?

What if it’s an economic disaster, rather than a natural one? What adjustments will we make to our collections process if the largest employer in the area goes out of business, causing a large amount of our customers to lose their jobs? Are the dealership’s accounts held in a strong bank or, even better, spread among several strong banks?

And of course once you have developed your contingency plan, have you put it in writing, and are you keeping multiple copies in separate off-site locations (e-mailing a copy to some dealer friends in your 20 group, for example)?

Again, the purpose of having these discussions is not to keep you up at night stressed out over all the things that could possibly destroy your business. Rather, it is to help you sleep soundly at night knowing you have a plan in the event of a catastrophe, so that if a bad situation does impact your business, you are prepared to pull out your plan and can implement it right away.

Vol 5, Issue 9

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