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Buying A Bussines In Cozumel


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#1 wolfie24588584

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Posted 26 October 2013 - 03:10 PM

hello eveyone i an thinking of buying an established business on the island . been here sevaral times and love the place , is anyone a expat business owner that has any advise i would be grateful for any info cheers 


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#2 Carey

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Posted 26 October 2013 - 04:48 PM

The more specific you can be about the type of business you are considering buying, the better the advise you get is likely to be.  There are plenty of ex pats that have made businesses work for them here.  That said, in general Cozumel is not a terribly favorable environment for foreigner business owners.  Lot of crashing and burning but some very notable successes as well.  Definitely not something to hurry into however.

 

It's hard enough learning the lay of the land as a retiree living here. I shudder to imagine the steepness of the learning curve for a new biz owner in Mexico in general and Cozumel specifically.  

 

Personally I wouldn't consider such an investment of time, energy and money without living here for a minimum of one year full-time and watching how competing businesses are faring and studying, on the ground, why they are succeeding or failing.


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#3 Freezin' Canuck

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Posted 26 October 2013 - 05:09 PM

Sound advice, Carey! Language, culture and customs, the economic outlook and laws and regulations to name but a few considerations. You might want to extend the stay even longer before taking a plunge.
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#4 Coz2wonder

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Posted 26 October 2013 - 05:48 PM

Don't put a dime down without a lawyer as your wing man.

 

Type of business

Years in business

Financials

Licenses

Liens

Building owned or leased

Employees current, or any that are due pay

Insurance

Corporation (type?)

 

That's the really short list.


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#5 wolfie24588584

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Posted 27 October 2013 - 02:22 PM

thank you for the replies its a retail clothing and kiteboard shop been going for 12 years 


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#6 Kandy

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Posted 27 October 2013 - 02:28 PM

I agree ... what type of business are you looking to buy? I own a business here and can confirm everything everyone has said so far.


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#7 Coz2wonder

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Posted 27 October 2013 - 06:03 PM

Your biggest challenge may be getting parts, and sails.

 

What is the current inventory, and the age.

 

Where do they get inventory for both shops?

 

It is a seasonal business, so be prepared to carry it through the slow months, as well as adverse weather when you can't rent.

 

Anything can be done, you just have to check off as many boxes as possible so that your not blindsided.

 

Hire a lawyer to work with you though the process, and documents.


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#8 pato52

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Posted 28 October 2013 - 09:05 AM

thank you for the replies its a retail clothing and kiteboard shop been going for 12 years 

Has it been making a profit for those 12 years?


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#9 wolfie24588584

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Posted 28 October 2013 - 02:25 PM

i am waiting for the books to look over but the owner says it is and has been time will tell i suppose, just looking for more of an insider point of view on how things work business wise, yeah would be great to come over and live for a year before making a decision but not practical ,any tips info ect what not to do strange bylaws things you really need to now,before you find out the hard way ,thanks


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#10 Coz2wonder

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Posted 28 October 2013 - 03:12 PM

if good are imported, then your going to need a customs broker to clear your products through customs.

 

That can take anywhere from a day to a week before it is cleaned, then you will have duty to pay because it is for resale.

 

There are SO MANY LAWS, AND PROCEDURES it will make your head spin.  

 

The worst thing you can do is to go in with your eyes closed.  Trust, verify, and cover your flakes.


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#11 Carey

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Posted 28 October 2013 - 03:43 PM

You have an exceedingly high chance of losing your shirt if your purchase a business without thoroughly studying the market and hanging around watching the local lay of the land for quite some time.  Right now is a real good time to see how things are doing.  It's one of the hunger -- hambre -- months -- septhambre, octambre y novhambre--low low tourist season

 

We will simply not be able to tell you everything you would need to know to make an informed decision.  If you can't afford to write off the investment money, my advice would be to wait until you have time to check things out for yourself  Being in a hurry is a truly excellent way to get badly burned in this neck of the woods.  Word to the wise.


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#12 wolfie24588584

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Posted 28 October 2013 - 04:10 PM

thanks guys really appreciate your comments , im in no hurry to lose my shirt been a brit i get burned far to easily (lol) i will certainly spend some time on the island before making a decision now i have read your comments , maybe hook up with you when im over if things go to plan , is there many brittish expats over there as never bumped into any whilst ive been over ?


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#13 hillbilly

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Posted 28 October 2013 - 05:28 PM

Are Canadians British? LOL


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#14 Carey

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Posted 28 October 2013 - 05:43 PM

I know three very nice Brits who are full-timers.  Trish is an orchid expert, Pat used to have her own music school and does a lot of volunteer work with that kind of thing here.  Can't remember her husband's name but he always seems to be wearing a smile. 


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#15 Steve

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Posted 28 October 2013 - 06:13 PM

Would that be Adrian's wife's shop. I don't know if it is or has been for sale but he would be a person to talk to.


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#16 Coz2wonder

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Posted 29 October 2013 - 01:52 PM

Best of luck to you.


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#17 Charles

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Posted 29 October 2013 - 08:23 PM

I was assuming that it could only be Adrian.

 

First question should be...is Adrian paying rent and/or is it a sweetheart deal since his family owns property in the neighbourhood. What would your rent be for the building and is there additional charge or rent due to the property owner? Nice to know just how much rent will be, to whom and just how long could you contract that location at an agreed price?

 

You are a Brit, a foreigner, are you by chance married to a Mexican? The rules of business and tax regulations are hugely unfair to foreigners or they must operate as a corporation and have a great deal more complexity in accounting rules and higher tax rates, much higher!

 

Looking back on 12 years of business, the tax situation and regulations have changed hugely for Mexicans. Many Mexicans can no longer operate as they have and their costs and taxes have gone way up too, in the last ten years, in the last five years especially.

 

Looking at that location, calle 3 and 5th avenue, in the last 12 years retail sales have collapsed, downtown is a retail disaster zone. Three hotels have been closed, three other hotels have been for sale for years. The Aguilar across the street used to have a solid clientele, the place stayed near full during the better season and still did OK in the off season, now it sits empty if they are still open. There are a minimal number of places "making it" and among those few, most either own the property or have a sweet heart deal on rent.

 

Just how much should the electric bill be monthly? If it will be less than the rent, probably the rent is too high. I watched rents in the pedestrian area grow during the 1990s when a small locale that rented for $500 monthly, the rent went past $5,000, that's dollars not pesos. During the era of escalating rents, the situation changed and the reasonable expectations of sales declined. The plaza and downtown area has had three different major remodeling projects in the last ten years. Despite these efforts, each project adversely impacted the business sector, sadly, the worst being the Plaza Sol which finally caused a number of long time Cozumel institutions to close. The debt owed by the city remains a problem, a big white elephant. The displaced people that tried it after the rebuilding found that their sales couldn't even cover the electric bills let alone pay a portion of the rent. If retail is bombing in the pedestrian plaza, how might that affect a business a block away? I'd expect business to even be worse.

 

A best case scenario, I'd expect sales, (that is the revenue coming in), to not equal the overhead six months of the year, overhead meaning just the rent and utilities, not including all the other expenses. Three months you may face not having sales equal the electric bill. These are just sales I am speaking of, not profits. People are lucky to have a business that does better than break even for six months of the year. These are the harsh realities of downtown. If you are expecting a business to generate income for personal living expenses, learn to eat cheap and rent even more cheaply.

 

If you look at the books of the business, examine the history in light of what your tax and accounting regulations will be, not what a Mexican national enjoyed years ago. What are your realistic expectations of kiting not already being maxed out, or that you can continue and do more than Adrian did. Adrian has an excellent reputation, he comes from a very old Cozumel family, has friends and contacts, connections that no new comer could ever hope to match. And he is savvy in business and knows the North American market. What makes you think you can do as well or even better? If your goal is to work and live in paradise, I'd suggest getting a job. Selling time shares or jewelry sales are the two main job opportunities for foreigners and with luck you can expect a base income of about $500 dollars monthly, at least during "high season".

 

Paula listed quite a number of things to verify and as she said, a short list. If you can go beyond what has been mentioned, there are a lot more details worth noting too. Good luck.


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#18 wolfie24588584

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Posted 30 October 2013 - 01:14 AM

thank for your comments guru they have been most helpful ! im under no illusion that it it will be easy to make a living running a business in cozumel  , sure there be lots of stuff i will not learn before hand , and to many i learn later , keeping them to a minimum is the the reason for my post ! again thank you all and keep posting !!!!


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#19 Coz2wonder

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Posted 30 October 2013 - 08:41 AM

There is a step that needs to be considered first, and that is what your citizen status is going to be.

 

If you are planning on BUYING, and MANAGING the business, you will need to have something other then a tourist visa.  You can certainly buy the business on a TV, but you will not have the right to sign any business documents, and checks as a tourist.  That is a legal question that needs to be addressed by a MEXICAN LAWYER.

 

As far as my knowledge goes, there are about 4 types of business arrangements. Owner. Partner, Limited Partnership, or Investor.

 

Each one of those need to be spelled out In detail as to what you are legally entitled to exercise, and these relationships are DIFFERENT under Mexican law then they are NOB (north of the boarder).

 

One additional thing to consider, without property working documents for yourself, you can not legally work in the business either.  Some do, but keep in mind, this is a small island, and everybody knows your business.

 

This is a snap shot of the reality here, but there is really no different anywhere else in the world.


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#20 pato52

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Posted 30 October 2013 - 08:46 AM

Keep in mind that there is going to be a 45% jump in Sales Tax starting in January of 2014. There is a fear that this tax will have a very negative impact on all business in Cozumel.


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