Sometimes it is easy to think that storms, floods, wildfires and other events are things that affect only “the other guy.” But, no matter where your dealership is, you face the very real possibility of a natural disaster.

Any natural disaster can have a profound effect on your business and the local economy, even if your dealership is not directly impacted. The major key to minimizing the impacts of disasters is to have a disaster preparedness plan in place for your dealership.

Preparation Tips and Checklist

Here is a checklist of steps that dealerships nationwide should take to prepare for any and all natural disasters.  In addition to safeguarding business records, good planning will help achieve another critical goal – ensuring a quick and efficient recovery after a disaster occurs.
 
The tips that follow are especially important in preparing for a hurricane, flood or other natural disaster for which there is an advance warning.
 
Safety First. Every business location should have an evacuation plan for personnel and customers. Identify any staff members who have had CPR, first-aid or other specialty survival training and appoint them team leaders in case of an emergency or evacuation.
 
Get two back-up tapes of your system, including the configuration tape. One should go with the Controller, the other with the GM.  In addition, verify that computer vendors have back-ups of all your current data files.
 
Set up a response team that will give employees updates, including notification of when to return to work. As part of the response effort, set up a system for recorded messages at the dealership’s main number, and provide each department manager with a list of home phone and cellular phone numbers and emails for employees. 
 
Get copies of all your insurance information. Make sure you have your agent information, policy numbers and contact phone numbers. Once again, a copy should go to both the Controller and the GM. 
 
Check your business interruption insurance policy. Check your policy so you are sure under what “post-disaster” situations you will be covered, and those when you will not be covered. 
 
Prearrange for the rental of generators. If your dealership does not have on-site back-up generators installed, arrange for generator rentals in advance of known storm seasons. 
 
Verify that your bank accounts have adequate funds to cover outstanding checks, since it may be a week or more before you will be able to make deposits.
 
Prearrange with your bank to have one week of advance payroll set aside, with a procedure where you can authorize direct deposits for employees if your dealership is closed or there are other inconveniences following a disaster.
 
Prepare for possible flooding and looters. Try to secure all vehicle keys, customer cars and cash drawers. Arrange in advance should you need to have on-site security posted in the wake of a disaster.
 
Locate a source for mobile trailers. In the event that your showroom is demolished. These trailers will serve as headquarters for cleanup and will be useful in the event that your sales operation needs to continue from mobile units.
 
Develop a plan for your replacement inventory. You may need to remove all damaged vehicles before new inventory can be brought in.
Cash flow and traditional forms of credit may be interrupted in the aftermath of a hurricane or other major disaster, and your dealership may qualify for federal grants or low-cost disaster recovery loans. 
 
Ira Silver is a CPA and a principal in the Tax and Accounting Department at MBAF. He can be reached at  This e-mail address is being protected from spambots. You need JavaScript enabled to view it. or by calling 800-239-1474.

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