Are you too busy selling cars to pay attention to the myriad number of lurking problems and issues that you haven’t had time to address? You would like to correct them and don’t know where to start?
Let today be the day you start.
First, don’t be the businessperson and entrepreneur who doesn’t pay any attention to the “what ifs.” What if happens! A lot, in fact.
Don’t avoid the risk. Start by being aware that risk is out there and everywhere. Sometimes you see it and sometimes you don’t! Unearthing unknown problems is a process and is heavy lifting. Rest assured there are steps you can take now to be a pro. Here are eight (8) action items you can start today to reduce your operational risks.
Doing an enterprise risk assessment means that you should examine all aspects of your operation for problems and what ifs. This is an on-going process and (1) is not accomplished overnight, and (2) should be a part of your monthly routines.
Here’s a starter checklist:
(If you are asking why you should waste resources on this, consider this internet posting example I found on a review site for a client: “If you are reading this and went through something similar at this ***** hole, email me at @***.com and I will be glad to talk with you.” This is exactly how class action lawsuits begin. Although, this is a huge exposure, it’s easily solved as a straight-forward daily task that someone must be responsible for and bring to conclusion.)
(Now is the time to formulate a proactive plan, not when you are under time pressure. If you have not had a problem here, consider yourself lucky. Not being pessimistic, but it’s an eventuality. This is not as simple as turning it over to your regular lawyer. Unless they are well versed in consumer law, they may not be qualified to respond. This is the worst situation because they will give you bad advice and you will likely act on it. That makes a bad condition even worse. I’ve seen it a lot and it’s ugly, expensive, and time consuming.)
(Are you unknowingly using bait and switch advertising? How you read and/or changed your disclaimers to reflect today’s advertising requirements? Recently, I reviewed a dealership’s websites and quickly found seven (7) violations within a three (3) hour quick view. Each and every mistake was actionable by an attorney, regulator, Attorney General, the FTC, or the CFPB (you get the picture here). Several mistakes made the dealer vulnerable to Unfair and Deceptive Acts and Practices (UDAP) laws under which the potential damages are tripled. Tripled! Plus, if sued, the dealer would be liable for the consumer’s attorney’s fees, which will be substantial. $70,000 - $80,000 is not an unusual number, sometimes it’s more. This is a disaster easily avoided by having a third party check your ad content regularly. This should be a regular monthly check as you change your advertising frequently.)
(Do you have a media policy? Do your employees know what to do or where to direct the reporter? The dealership should have a written media policy signed by each and every employee with a clear delineation about who is authorized to speak to the media. Usually, by the time the news crew arrives, the station already has the customer “in the can,” i.e. the customer’s interview has already been recorded and approved by the station manager. So, the only thing left is for the news crew to interview you on camera and get your side of the story. Sometime, stories can be stopped with facts but you have to be prepared and know how you are going to handle these situations. PRO TIP: Do not ever submit a written comment on your letterhead. Then, everyone who sees the story on television sees your logo with the response! That’s not helping your reputation.)
(This has nothing to do with income tax. This is how you report customer “cash” transactions to the IRS in compliance with their regulations. Fines for willful non-compliance can be up to $5.5 million and up to five (5) years in jail. Did you know that a traveler’s check is cash? Did you know that a cashier’s check for $10,000 and under is considered cash? Do you have a written policy about how your dealership handles this issue? Did you send the customer a letter at the end of the year indicating that you filed a Form 8300 with the IRS? Big liability here. Get on it.)
(First, do you have a written spill plan? Have all of your employees signed off on it? Remember in our business, if it’s not in writing, it doesn’t exist. It’s very difficult to keep up with all the pollution and environmental regulations. Do you have pollution insurance to cover a spill? Did you know you can be personally liable for this type of accident? What happens if your waste oil vendor dumps your used oil in the river? Do they have insurance to cover you? Are you tracking the insurance of your vendor? These “what ifs” get messy, quickly.)
(Twice-monthly training for your employees is considered “best practices.” Even more importantly, when you train, you must have employees “sign off” on the training materials. Then, you demonstrate to the regulator by providing your training materials with the employee’s signature. If you can prove an attempt to get it right, the regulator will generally be more lenient with you. If you appear to totally disregard this particular area of compliance, then buckle your seatbelt. If a regulator arrives at your dealership, generally they won’t leave without you writing them a check. The question is whether that check will be a few thousand dollars or a “5” or “6” figure check. Oh, and do you have any insurance which might cover these instances?)
(First, have you considered having insurance to cover this type of claim? Second, do you have an Employee Guidebook that has policies on how to cover these issues? If you do not, you leave yourself wide open and vulnerable.)
So, there are eight (8) actionable items for you to consider. Ignore these at your own peril because when one bites, you’ll hurt.
Tom Kline, a former franchise dealership owner with 30+ years of experience, specializes in risk mitigation by preventing and solving dealership problems through risk transference remedies, compliance, and dealership dispute resolution. Tom is the Lead Consultant and Founder of Better Vantage Point and has worked with both publicly-held and private dealerships. Kline speaks at national conferences and workshops, writes for six (6) publications, and has endorsements from multiple trade groups. Thanks for seeing things from a Better Vantage Point, where “We Get You Out of Trouble…and Keep You Out of Trouble."
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