#334 - Hurricane Beryl Hit My Business

This is the Independent Dealer Podcast, Education by Dealers for Dealers.

Now here are your hosts, Luke Godwin and Jeff Watson. Hello and welcome to the Independent Dealer Podcast brought to you by Buckeye Dealership Consulting. Take number three. We have Russell Moore down in hurricane alley dealing with some issues that's hanging over and also causing his Internet to be horrible. So hopefully we make it through this interview with him. But Russell, thank you for joining us. What's going on down there? Fill the listeners in on what you're dealing with.

Well, we're dealing with a, with a hurricane with zero power around here. I think there's. In my town of Conroe, we've got probably still 200 something thousand people out of power and they claim that we're not going to get that back on till around the 14th. And so my dealership is in that area. My house is in that area and I can't. I have a whole house generator. So my house has got power, but I don't have it at the lot. And it is, it is horrible.

Yeah, I've been through something like this before. In 2015, October 2015, we had a flood in Colombia. I mean, 20 inches of rain in 20 hours. It was horrific. So many people around us lost. Well, the dam bust, busted for our local water system, so we didn't have any water, which really creates a problem. We didn't have power. We didn't have water. It took, you know, a week and a half to get power back on and a day, two or three days just to get water again. And then it was, you know, it was just a real nightmare. But yeah, I feel you, buddy. It's. That's a tough situation, Jeff. Y' all don't have to worry about rain like that up there.

Yeah. You know, I live in God's country, so we don't ever have any kind of natural disaster. No hail, no sleet, no hurricanes, no flooding. It is 112 today, gonna be 14 tomorrow. So everything hates you, it tries to burn you. But other than that, this is unique situation. Right. So what Russell's dealing with and the reason we wanted to have him on is because we do go through this as dealers. Right. I mean, I never. The closest thing I had was Covid times, right. When it was kind of like an all hands on deck crisis situation. What do we do to keep the dealership alive? Keep people's paychecks. And in the unique situation, you're buy here, pay here, what do you do with your portfolio? Right. I couldn't even imagine living down in Texas or Florida or Georgia and having a large CPI penetration and just watching the Weather Channel and just being like, oh my goodness, my portfolio is about to get wiped out. My CPI is going to get absolutely devastated. Russell, how has that panned out for you? Do you have any preliminary numbers on, on your, on your vehicles, your portfolio? Did it take out a lot of cars or are you okay?

No, I, I don't think it was a flood event. It was a wind event. So at this point we're not. Now, now don't get me wrong, we had some flooding areas, but we didn't. The most of it was the wind and that's what it took out, a lot of trees and, and a lot of that kind of thing. So as far as the CPI and the portfolio, as far as that's concerned, I'm not too worried about that. If I lose four or five, that's fine. I think the biggest takeaway is, is, is trying to figure out how to contact these, you know, you know, these customers. That's where I, you know, I struggle the most with. And you know, I've been talking with my wife about it and trying to, you know, figure out what I need to do. And I think that's what started this conversation with me being on here this morning was me reaching out to, to you guys as my group members, trying to get some ideas of what you guys would say. And, and so that's what I've been trying to figure out.

Yeah, this is, and Jeff, you brought up this, this kind of can be a lot like Covid that each individual person's situation during this time is different. Every one of our customers situation is different. And you know, some people are going to be working for Home Depot and for, for Lowe's Home Improvement and they are going to get triple time. Right. They're going to be working all the time.

Emergency response, health care, city workers. They're going to get over time and a half.

That's right. And they're going to keep getting that, that money coming in. But then you have the customers that work for McDonald's which may be shut down for three or four days because they don't have power, or for daycare that shut down for three or four days because they don't have power. Then all of a sudden you have a situation where someone actually cannot make their car payment. And what do you do? I mean, I know what you do, but, but that's the real question how you do it.

So what, here's what I'm doing right now. So I learned something during COVID and the main thing I learned was you got to watch what you say to people in a mass text. I learned the hard way. I sent out a text which I was telling the truth, but I wasn't telling it in an empathetic way. Right. I didn't word it right. And I got blown up on social media over that. They were screenshotting my messages and sending that stuff out. And, and so I learned from that. And, and so this morning, you know, whenever I sent that message to you guys, I've had a couple of group members reach out, and one of them, Jamie, sent me a beautifully written email that she used during COVID And I've. My staff is working on that right now. I'm putting my name in it, and we're going to send that out, and it's, it's very, very well written. And, and then one of our other group members, he, Jeff Williams, he reached out and he said, look, he goes, we've been through this. He goes, I lost a complete store for two months. He said, we didn't have power for two months. So he goes, I got the playbook on this deal, Joe. Whenever I, you know, listening to his trials and tribulations, I mean, he said, look, you know, you've got to still be firm with your customers. You still have to talk to them, they still have to make the payments, or your portfolio is going to blow up. You know, I, I think the, the key takeaway that I got from him to help other dealers that are going through this, and this is the best advice, Jeff, I, I took away from him was give your customers something before you start asking for something. He said, we went and bought a pallet of water. And he said, just have it sitting there. He goes, not that many people are going to take you up on it, but you got it there. Give them something before you ask for something. And I was like, oh, my God, that's brilliant.

That is, that is actually, that's a great way to do it. In fact, when we had that issue in 2015, we, we had a big F350 long bed truck. I said, dad, get in this thing and drive up 77. And you just go until you get somewhere that has gallons of water and you buy every single one of them. And we filled up the back of that F350. We parked it on our lot when nobody else was open. We didn't have power. And we posted on social media, customer, not customer, to limit to per person, come get it. And I Tell you the amount of goodwill that brought and what it costs is a couple thousand dollars. Who cares, Right?

Yeah.

And the amount of goodwill that did in the community was huge. So you can turn a bad situation, as Jeff's talking about, Jeff Williams, a bad situation, into a really good PR situation. And not. Not that we're trying to benefit ourselves from this. We're trying to actually help people. And that's. You got to give a little bit to get it in return.

Yeah.

And something else too. I mean, this morning. So today was the first day that I went up there and we opened up. So I mean, I hadn't been open 30 minutes and a lady came in and was frustrated and so her auto pay had run and you know, she's wanting her money back. Okay, well, you know, I get it. I told. I truly do, but I can't at this point. I didn't have power to anything to even verify that we even took the money. I. I couldn't even. I wasn't even ready to open up to get that information for her.

Yeah.

You know, another thing that I will tell people is you've got to have some power, you know, to be able to. I get it. It's just hard.

Yeah. What you're saying, Russell, is just like, you know, we talked about in a previous episode about having this contingency plan in case you lose your. Your database. Right. If you have a cyber security breach that shuts you down, what is your contingency? What is your backup? And like you mentioned, you have a whole house generator at your. At your house. You know, as dealers, do we need to be looking at, like, why do we not have large generators at our dealerships that will either run the whole thing and. Or at least run a stack of computers and a little portable AC unit to be able to get.

I will have in a month get one now.

So, you know, I mean, that's very interesting, Jeff. The building we are in now we bought from a new car store and it was their data hub before everything was cloud based. Everybody had these big dealerships, had essentially a building which was. Is our current building that housed computer servers and phone systems. And they had a generator out back of that building that ran on natural gas. And they never lost power to their phone systems or their. Or their Internet because they had it there. And so they always had contact. And it's a really good idea to do. And we're talking, you know, to run most dealerships, five to $10,000 probably to install one. And I think it's probably if you're in a place that has a lot of natural disasters. And I would consider, you know, Houston, Texas, the panhandle of Florida, all of Florida, to be one of those areas. Louisiana, parts of California, is something you should probably really look into because these things happen and I've been without power for, for a week before and it's no fun. Luckily, luckily we have vendors like Blitzpay that we can actually take payments if we need to. We can log into their system from our home if, if we have Internet to take those payments to communicate with our customers. But you've got to have, as we've talked about in the last episode, contingency plans on how to deal with these things. Because some people do want to pay you, Russell, and then some people are going to get mad that, that you ran their auto pay when you had.

Nothing to do during a crisis.

Yeah.

What is your policy, Russell? What are you doing? Are you putting that into writing or are you doing this on a case by case basis? If someone comes in and gets mad, no questions asked, I'll refund your money. I'm not going to push you for your payment for a couple of weeks. Are you, are you giving deferrals out freely? What, what have you made a decision on those?

So the decision I made this morning was after talking with her, once I get the system back up and I can confirm that I did get the money or whatever, I am going to probably help her in some sort of manner. I don't know what that is yet, but I am going to help her. I will call her. I took her name down. So yes, I'm, I'm putting a policy together that we're going to do deferrals. We're going to do all of that for. I think, you know, we, we talked about, I think most of the people are. This cycle, pay cycle is not the one that's going to be the screwed up one. It's the next one. So once, you know, once all of that starts trickling through, I'm probably making more out of it than it really is. But I still got to be empathetic with the customer. I still got to be sympathetic. I, I do not want to be the mean ogre that just is, is calling, beating them up. You know, give me the keys or get down, down the road because I'm going to get a lot of keys if I do that.

Do you mind sharing with the audience why this customer felt like they needed.

That money back to feed their kids? She specifically told me I got. I don't have any money. And this is going to make. I make me upside down where I can feed. Where I can't feed my kids. So at that time, I, I didn't have. I didn't have any money in my pocket at that time, but my credit cards or I would have reached in and gave her some money at the point. At that point, not even knowing. So what I'm going to do when I get back, I grab some when I was here. When I go back, I'm going to call her and just tell her, come up. I got 100 bucks for you. Whether you. Whether you are a good customer, paying customer, that. I don't even know that yet. But yeah, it doesn't matter.

It doesn't matter whether she is a customer or not. Who knows?

That's how it does.

Exactly. She's fixing to get 100 bucks either way.

What's funny, Russell, is you say that, but you're right. This. That's a little alarming that within a couple of hours she's nervous about that. Right. And some of our customers are, are. I mean, I guess they're running hour to hour. I don't know, maybe they're on the daily pay plan at McDonald's or something. And so their checks are coming in. And so when that thing happens, they get so short automatically. But are you. I remember during COVID I had a set of criteria that I set up with my collector that said we've got to have a proof of hardship. They have to send us something, right? That says, hey, I work here. My hours got cut back, I got furloughed, I got sick. I have a doctor's note because once the word gets out that you're going to give deferrals, everybody will ask regardless, Right? So I had a criteria that all a couple little hoops that had to be jumped through. But then I was very willing to give those out. Do you guys see in Russell's situation, would there be any harm with him just freely giving deferrals to people that could prove hardship?

I don't think there's a problem at all. And you know, you could even do, I mean, Russell, your weekly payments, right?

Bi weekly and weekly.

Mostly bi weekly.

Okay.

A weekly.

You could.

I mean, honestly, you could defer everybody's payment for two weeks. You could.

Yep.

Yeah. And.

And never miss a beat. And. And sometimes you have to look at situations like that because you may get. You may give deferrals. If someone calls and asks, just do it right so you have to take that in consideration. One thing you can't do and, and people out there that are buy here, pay your stores, I hope you know this law. But as soon as the federal government decides to declare something a national disaster and you're in that, you're in that area, you can't repossess the car anyway that matter. So you've got to make sure that you understand those laws because as soon as it's, as soon as it's declared natural disaster, you can't touch anybody until after it's undeclared, a natural disaster. So be very mindful of situations like that. So, so you can't repo, you can't collect. What, what do you do? Sometimes you just have to get referrals.

Yeah. And it's the communication thing. Right. If they're communicating, that's the number one thing.

And that's the thing about with our customers though, you know, Jeff, you know, you're looking at. Our customers are probably the most resilient people in, in the world. They can do the most with the less amount out of anybody. The fact that that $273 payment that she made is affecting her that much. But I guarantee you with my hundred that I'm going to give her later on today, she can stretch that into a week and a half and she will make it work. She'll make it go around and pay, you know what she needs to pay. And, and that's what we got to try to remember is we got to help them. They're the ones helping us make the money. We got to take care of them and the deferrals and all of that stuff, that's, that's not, not a big deal.

Let me, let me shift gears real quick, guys. So we talked about the portfolio for those buy here, pay here dealers. Now what if you're a retail dealer and you're in this situation? So Russell, what are you doing for your actual dealership to get it and your employees back on their feet? Are you kind of in a sit and wait and I'm not trying to sell cars today or tomorrow or are you in a. Hey, man. All hands on deck. Let's get a generator running. Let's get some hotspots set up because we can still deliver cars to people who might need another car who got wiped out or maybe they were just going to buy one anyways and they don't care and this is over.

Like I don't care about selling a car for the next few days. That, that's the least of my concerns right now because I don't think that's on everybody's mind anyway. So my concern right now is what you just said. Getting the generator up, getting some stuff done where I can communicate with my customers. I will say that my employees, none of them have power. Not. Not a one of them has power at their house. So, you know, trying to get, you know, they're living what all of my customers are living right now as well. So we're. You got to make sure. And. And that's what I want to make sure next time this happens, that I do have a generator. So I have AC for my people to come up. And I don't care if they just come up and hang out, you know, I mean, just trying to give them a cool space to come up because there ain't no space here in town.

Wow.

Yeah.

I don't know. That's my thoughts on that.

Buy a box truck.

Sounds like no one thing, though, Jeff. You talk about retail customers, retail dealers. You know, a lot of times these events cause the next month to be good because cars get totaled from whatever. Floods when. Whatever. But the cars get wrecked, and so people have to buy new cars. So it's one of those things. You sit and hopefully you've managed your business well enough that you're okay for two or three weeks without anybody making payments.

Right.

Or without selling a car, that you can wait to sell the cars because this will create demand at some point in the near future.

But, Russell, what about your employees that are now going for a week or two without any pay? You know, I don't know if you have mechanics, reporters, or. Or all salesmen or what it is, but have you thought that through yet? Or any advice for dealers as far as, like, are you going to pay them anyways or is it like, hey, everyone gets a free.

Absolutely, absolutely. I've already. They don't even know it yet. Today's payroll. I've. They don't even know it. I. Whenever I pay them today, they're going to get their full paychecks whether they were there or not. That's just crazy not to. It's not going to be, you know, you want to keep your employees happy, right? I. I just. If you're that tight on money, then, look, you're. You got other issues besides that. You probably already lost most of your employees at that point, I feel like. But you can't. I get it. And it's still it. Money is tight, but at the same time, it's Tight. Just imagine on, from their side that the customers, the employees, they're not making what you and I are. And I don't mean that in any other way than what it is. I mean, it's just they're going to get their money, I'm paying them. So.

Yeah, that's, that's. I think that's an odd starter for sure.

What I feel for is, is if you are a retail dealer, large or small, and you have been going through a period of, of tighter, you know, your belt loops have been real tight lately, right? Interest rates, you know, kind of the dog days of summer sales slowing. Now you're sitting on two weeks of inventory that's doing nothing for you. So I guarantee, I don't know if your flooring line is going to give you a break or not on those payments, interest and curtailments, but, but then also paying salesmen and all your staff through this, those are the guys I feel bad for because I know that even some retail dealers can be paycheck to paycheck, right? I mean, you're shoestringing it and you're just trying to get through some tough times. This is, this is not fun for, for those guys at all.

It hadn't been fun for me the last year with the interest rates being what they are. But you know what we've made it through, you know, to, to this point and, and hopefully I'm knocking on wood that, that we continue on. So, you know, I, I hate that we've lost a lot of dealers to the interest rate crunch and we'll, you know, the local dealers around here going through a crisis like this, this may be the, the final straw for some of them. Yeah, I hope it's not, but it very well could be.

I don't know.

That's, that's a sad situation and it's, it's going to get worse as, as we continue down this road of higher interest rates for the next at least two to three months. But, and I'm not sure 25% interest rate cut is going to, to help that situation either. But a, that's the reason it's so important for everybody listening to run your business the best way possible to be tight with your resources to prepare for events like this that do happen. And you know, Jeff Russell and I are in the same 20 group, so we have a lot of good board members of our business to help us make sure that we do that. We have a group me thread that, that we're real interactive in that that we all help each other out. And I'm so appreciative, appreciate, Appreciate you all for, for that, for coming up with those ideas and, and helping us through because this, I mean, if we didn't have each other lean on, this would be a tough situation for anybody to fall into. And some dealers just don't have that.

Yep, 100%. And again, we, you know, we're, we're learning every time, you know, we had guys, you know, we had another discussion about, you know, what happens if we're the, the CDK guys and, and we go down like that. What happens if that worst case disaster box. Do we have one? Are we set up? Are we ready for it? Yeah, this is it for me. This is my cdk.

What if you were one of those new car stores that just got off of a CDK cyber shut now for.

The last two weeks and then you.

Got this punched in your face two days later? Russell. Well, hey, thank you for joining us. This has been great, hopefully educational for all the dealers and I really hope you guys get that situation figured out before January when our, our 20 group goes down there. Your neck of the woods.

So the taco truck is open. I got, I went by there yesterday. So we're, we're still good, baby.

That's the only thing I was worried about.

Restaurants is the taco truck. They're all. It's got a generator strapped to the back of it. It's always open.

Absolutely smart.

So great.

All right, thanks, Russell. Best of luck. Thank you for listening.

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We'll catch you in the next episode.