Sunday, 28 October 2012

Critical Fumble - Follow up

So following my last post Critical hit has made some changes and posted a response on their PledgeMe page. 

I thought I would offer my measured response to the update on their page.

As Momma said "If you start something you had best finish it"

So gentlemen, allow me to retort. 

I’ve recently had some questions as to what we have in terms of a business plan, and other such things. If you’re interested in knowing more about any of the items listed below, don’t hesitate to get in touch.

Questions? Or did someone link you to this post. I know I haven't asked any specific questions directly to them, but if they are responding to this post it would be nice of them to acknowledge that. 

We do have a business plan. It’s probably got a few flaws in it, but I am talking to people about it. I’ve been in contact with WECC, and GrowWellington, as well as an expert from my bank. We’re getting it sorted, so that it’ll be ready to show to potential investors. You can see it, if you’re interested.

They should probably have mentioned this up-front. It's a pretty important part of starting a business. Saying "We have developed a business plan" sounds a lot better when your asking for cash off people than what was initially listed. 

I'm very interested to see how much the pledge site has changed and updated in the last few days. Still, that all seems in response to my post and not a planned approach to communications and marketing.    

We have profit/loss forecasts, cash-flow forecasts, capital expenditure budgets, and a break-even analysis. Yes, they are based on real figures obtained by research into the market. They’ve even been looked over by an accountant.

I must admit this made me giggle a little. "They’ve even been looked over by an accountant". I would freaking have to hope so. I talked to a few people who have also run the numbers in previous years, some even sent me spreadsheets (that may or may not have been looked over by an accountant). 

Londo Mollari is unimpressed
One of them is a successful businessman in wellington with over 15 years business ownership experience. I won't name him, but this picture will tell anyone who knows him exactly who he is. 

His response was this "Its a massive risk for very little return. NZ is at the end of the supply chain, we are massively exposed to currency fluctuations and sometimes stock just won't arrive. Rental costs in central Wellington are insane, and the cafe market is saturated right now. Online competition will kill them and so will GW. Tell them they're are dreaming if they think now is a good time to start a profitable games store, if they work hard, buy well and market well they might make it, but they won't be rolling in cash. It's certainly more effort than it's worth right now and the risks far outweigh the benefits."

We have a location in mind. We’ve been talking to several real estate companies and landlords, and we’ve settled on a decent location. Better yet, the landlord actually want a cafe-type business in there and are willing to help pay for fit-out.

Don't have funding or a finished business plan but they have a shop picked out? The real positive is that the landlord sounds willing to stump up some fit out costs, which is good. I'm just wondering what kind of lease you'll have to take after the shop is refitted. 

Does the landlord know they are window-shoppers with no finance I wonder? 

We have experience in this area of business. Susan, who will be managing the store, has worked for years in retail and also has years of experience managing a cafe and as a barista.

I've had several people email me about this particular factoid. I personally have no issues with Susan but people have been telling me that she was part of the problem in the store. Susan will be managing the store, but what will  the other two partners be doing? Studying? Working odd jobs? building relationships between Science and students? Or developing web-apps?

A games store will need to do some serious turn-over to keep 3 people paid. And if Susan is the only one in the store how will they prevent the same "absentee-owner" syndrome that killed WGS from happening to Critical Hit? 

If Susan is leading this, i'd like to see her lead. As it stands the site clearly has Daniel, the student with no retail experience, as the leader. 

We are serious about this. Something that I feel needs clarification, as it crops up all too often in this area of retail. Not once has the phrase “Wouldn’t it be cool to run a game store” passed our lips. We don’t want to run a game store just for the sake of running a game store. This is a business. Not a hobby.

They say they are serious, yet everything presented to date is amateur. I'm glad my post has had an effect. It's better that this is pointed out in the planning stage than in the bankruptcy stage. 

I notice the team profiles have been updated, which is good and should have been day one. 

"Daniel Atkins is the kind of person who doesn't give up when faced with an impossible challenge. This entire thing was his idea, and he's put a lot of effort into getting it this far"

This bit of pufferey makes Daniel sound like a fool. Good business people know when "the cheese has moved". Bad business people plug away with outdated ideas and business models. IMPOSSIBLE TASK, ill just keep banging my head against a brick wall!  

I know i'd prefer to give money to someone who hadn't declared they would ride a sinking ship to the bottom of the Atlantic. 

Also, make the other two (who weren't on the pledge site to start with) sound like passengers swept up in one guys vision. "This entire thing was his idea" Is that a vainglorious declaration of pride by one person, or the abdication of responsibility from the product from the other two?

Why haven’t we just got a business loan? Believe me, the bank was the first place I went. I’m a student - I don’t have property to secure a loan against. They were only willing to offer 50% of what we needed, and only if we got the other 50% ourselves. This is entirely sensible, even if it does put us in a difficult position. We need money to get money.

Need money to make money is true. Under capitalization is what kills most start up businesses. Nothing wrong with taking the loan, but I can see the bank being reluctant to lend... being a student and all with no assets. 

See how that works? Bank looks at them and says "Student with no assets = big risk". Can't think why they would think the Wellington gaming community would be any different?  

Why crowd-funding? We know it’s not likely to succeed, given the amount we’re looking for. We’d be total idiots if we were reliant on that happening. But it doesn’t cost us anything, and at the end of the day, it’s free publicity.  

Not all free publicity is good publicity. The only thing it could cost them is "good will". See this note on the page. 

"Pledges will only be charged to your credit card if the target is reached by 30/11/2012 at 11:59 p.m."

They asked the community for cash, knowing they wouldn't succeed. What's the point in that?  They list raising the 50k as an objective, a public objective for the organisation. Now they are saying that the objective is not likely and that they're not idiots to know its not likely?

I wonder if they treat all their objectives with this kind of disposable contempt... seems like acknowledgement that this "impossible task" has been given up on already.

Oh wait.... Here's a motto

Critical Hit "We don't give up on impossible tasks! We just fail them!"

Bonus trivia: Critical Hit's webpage  Note that they are a store in Melbourne. 


  1. If they were serious about the crowd funding their pledgeme would look like this:

    Goal: $$ = lease for 12 months
    Stretch goal: $$ = lease for 12 months + Wages for 12 months

    Rewards would be a gift voucher equal to amount pledged.

    That way they basically presell their product and have enough sold to cover costs for a year. They can then go to the bank for a loan for physical items which is less risk for the bank.

    1. Good suggestions, I hope they take them on board.


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