How Dealers Can Cope With Disasters

Dealers who have been through disasters say the worst thing to do is to underestimate the damage that can occur.

Clint Fransen

November 20, 2015

3 Min Read
How Dealers Can Cope With Disasters

Disaster can strike with or without warning and, large-scale problems such as fire, flooding or tornados can have significant and long-lasting effects on dealerships. Many people don’t realize systems can be one of the hardest things to replace following a catastrophe, especially if a plan hasn’t been put into place. Buildings can be rebuilt, equipment and inventory can be replaced, but data can’t always be recovered.

A data loss can be a financial short-term hit for some businesses. It also can affect large and small businesses in the long term.

For example, Hurricane Sandy caused more than $50 billion in damage and losses, with businesses still in the recovery process three years later. An estimated $30 billion of that was attributed to business in the form of closed offices and factories, and shutdowns in transportation and electricity.

To help make sure automotive dealerships are prepared in the event of a natural disaster and can recover quickly, here are a few helpful tips to consider.

Have a written plan, and give everyone a copy. This makes sure everyone understands what their role is and the steps they need to take in an emergency.

Designate a primary and backup person for each of your critical systems (computers, network devices, security systems, etc.). Ensure they have proper access and their emergency contact numbers are up to date.

Consider keeping copies of other important system and critical vendor information in a secure location. Dealers should have materials and processes in place to do business the old fashioned way, on paper, until power is restored.

Designate teams for key business operations. Before, during and after a disaster, your most crucial operational need will be communications. Without it, you can’t do much else.

Designate a team that’s responsible for key communications, as well as your day-to-day business operations (payroll, parts, service, etc.) and data recovery. Data recovery will require coordination between various departments in order to get things put back together.

Following a disaster, the accounting department should repost all documents that were lost.

Coordinate with each department to determine which documents will post automatically due to their data recovery process and which documents will need to be posted manually. Re-enter any updates to accounts receivable and accounts payable. Update account balances. Post missing payable checks. Re-enter any payable invoices, receipts and purchase orders.

Re-enter finance and insurance deals that were done manually. Check all non-finalized deals for any updates.

Re-enter any payroll that was not entered into your accounting system.

Use an offsite location to back up your on premise data and paper records. In the event of a power outage or system failure, you will want to have your data backed up in a secure environment or on physical media sent to an offsite storage location where your paper records also are stored.

Ensure that your offsite storage vendor is taking items to areas that won’t be impacted by the same threats as you. For example, if you’re in a hurricane zone, use a site that isn’t.

Evaluate your disaster insurance coverage. Review policies with your insurance agent to make sure the dealership is covered for different types of disasters, and record the proper values of your building assets and inventory.

Dealers who have been through disasters large and small say the worst thing to do is to underestimate the damage that can occur.

Following these simple steps and preparing can make a big difference. If you have a repair facility, your customers will look to you if there has been damage to their vehicles following a disaster. There may be a need for new means of transportation within the community that you can fulfill.

Preparing for the worst helps ensure the negative impact is managed and mitigated as much as possible.  

Clint Fransen is director-global business resiliency for CDK Global, an automotive information technology company.

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