Running a business on 5th Avenue in Playa Del Carmen
A lot of people write to us and ask about opening a business in Playa Del Carmen. That usually means on 5th Avenue, the long pedestrian street that is the central focus of Playa and tourism. The idea of living near the beach and running a business sounds ideal to many but like anywhere, there are unique circumstances and situations that are involved in running a business. Playa Del Carmen is no exception.
We sat down with business owner Karla Villarroel who owned and operated The Little Teapot on 5th Avenue. Karla Villarroel is from Mexico City but also was living in Argentina for seven years before coming back Mexico and has settled in Playa Del Carmen.
Why did you start a business here in Playa Del Carmen?
I was working as a journalist in Argentina and worked for ESPN but that level of work is just not available here. So I did find a different type of job here that was paying well but the joy of doing what I wanted to do was not there. I decided to follow my passion of tea and make it a business.
I love tea and actually never drink coffee. There was no tea in Playa Del Carmen so I saw an opportunity there to provide for the tea lovers, both tourist and locals. We serve both hot and cold drinks because it is Playa after all.
How did you end up in this location on 5th Avenue?
I knew the right people and the timing was right so I bought the commercial space.
What things were hard and what things were easy in opening a business on 5th Avenue?
Everything was hard, well, I take that back, there was one easy thing. Since Playa Del Carmen is a small town everything you need to do for paperwork is close by and there are not a lot of people in front of you trying to get the same paperwork done. That was the easy part. (but this is still Mexico and you must wait on some things)
The hard things were trying to get supplies. Since Playa Del Carmen is a small place there are not many places for furniture for example. If you want a certain style you might have to order online or pay more for things you find here.
For our product, tea, well there is no tea production in Mexico so we must import all of it. A good tea shop needs all of the specialty teas from all over. I have an import license but still dealing with customs is still hard.
Getting good suppliers is also hard. You need to get consistent products to make what you sell and I have had suppliers just say from one week to the next that they do not have what I need. For example we make huge peanut butter cookies which are a customer favorite. Sometimes there is not peanut butter in available or not the kind we need to keep out product tasting the same. You can look further out from Playa to order what you need but often they can deliver to Cancun or have a distributor there but it can still be hard to get it to Playa Del Carmen.
Do high and low seasons effect you?
Several years back there was more of just a high high season and mid season. There was the H1N1 virus scare and then the global economy dipped so we do have high and low seasons now. We are gradually getting back up there though. So you need to be prepared to carry your business for 6 months of the year and you need to budget that out. Even if locals are part of your business, they tend to have less money in low season, so they will buy less.
Large all inclusive hotels are full most of the year but that is because they can lower the price and they have higher profit margins. Smaller businesses cannot lower prices that much because that have a slim profit margin already.
What do you think has added to your success here?
You have to know Playa. Visitors want something unique when they come here. That is what makes Playa, Playa. Locals don’t want franchise businesses and people want small places. You have to be unique to be accepted by both locals and tourist.
What advice would you give to people thinking of opening a business here?
- Get very informed and research everything. The worst thing is not knowing about things because you will end of paying more. If you are going to run a food business then join Canirac which is an association of small businesses in the food industry and they work on your behalf to navigate things for you. It is only a small fee to join.
- Design your space well. Put a lot of planning into it. People get too focused on their product and think everything else will fall into place but design is important. You space has to be useable by your patrons and make then feel comfortable.
- Expect cost to be triple what you think they will be! Food cost, staff, paying for IMSS ad taxes all add up.
- Get a good accountant. Make them your best friend. They can give you good advice like paying for trash pick up service for a whole year because if you are late one month you have to pay a large fee. They can also explain the new tax laws. New businesses actually get 10 years of not paying 100% of their taxes. The first year is free and then it goes up in percentage each year.
- Know your cost. Supplies in Playa Del Carmen might cost more and you might be tempted to buy in small amounts when you need them but it is better to buy in bulk even if it is an outside source from Playa Del Carmen.
What type of businesses do you think fail here?
- Businesses that are too big. I have seen places that were doing well and then they expanded and then closed. Having a big business just does not fit well in Playa Del Carmen.
- If you try to bring a franchise or chain business even if it is from another city in Mexico.
- If you try to do more then one idea. It is best if you stick to one thing.
- If you are not unique and are similar to other businesses you will fail.
Now that you have become established on 5th Avenue, what are your future plans for The Little Teapot?
We are constantly upgrading and adding to our store. I just added a spray mist system so it keeps guest cool while sipping tea and sitting outside. Fake grass was added to our outdoor seating area because when I think tea, I think about a nice green space, that took two months to get delivered. We are working on our website and want to be able to provide more products online. We have the possibility to expand to Cancun, Tulum or maybe Mexico City but still keep the same unique service and the quality of our product.
Thank you very much Karla for talking with us. I am sure a lot of our readers will appreciate your insight into what it is like to run a business here.
If you enjoyed reading this article you might also like to read our huge article on opening a business in Playa Del Carmen.