Last week I came across BodeTree (pronounced BOE-dee Tree), a piece of slick online financial software that has its aim set on small businesses — especially those who find that their finances are too unwieldy. BodeTree Founder Chris Myers puts it more bluntly when he says that “[BodeTree] is a finance tool for people who hate finance.”
But what exactly does BodeTree do? At first I misunderstood BodeTree and thought of it as nothing more than a gimmicky piece of accounting software. It isn’t that at all, but rather a “number crunching’ cloud based service that turns your accounting software data into a series of ‘enlightenments” showing the strengths and weaknesses of your business. No really, there’s a floating Buddha character that glows green when your business is a-ok. BodeTree also promises super cool graphs and power bars – not the kind made from old Chinese newspapers and apple cores – to measure your business stats and those of your competitors.
Could BodeTree actually Harm your business?
As this Tech Crunch article rightly points out, BodeTree isn’t made to oust all business consultants and strategists, just the low-end, mail-it-in types. As such, it would be unfair to judge BodeTree as the be all and end all in terms of business strategy. Still, Bode Tree has some major drawbacks that may end up actually hurting your business. Our resident accounting guru, Jim Greer, explains:
Many small businesses don’t have reliable numbers in the first place and if your numbers aren’t reliable, then BodeTree could harm your business if you followed the advice. And even with reliable numbers, it’s the sort of thing that might make a business owner have the illusion they’re on top of things, but I don’t see how it’ll give much useful advice; much of the analysis it provides is what Wall Street companies use to inform their investors, CEO, or others who can’t see day-to-day data, but isn’t really necessary for a small business owner who handles the day-to-day operations and can see how much cash is coming and going.
Myers has said in an interview with Entrepreneur magazine that he recommends at least 3 years of Quickbooks experience to negate this problem. Oddly, this advice is absent on the BodeTree website.
So is BodeTree Worth it’s Asking Price?
Curiously, BodeTree has doubled its cost in a single year. So is the new $500 per year cost worth paying? For a new or inexperienced business, I’d say no due to the problems mentioned above. But for an already established small business that is looking into consulting, BodeTree may be a viable option.
We will be rigorously testing BodeTree this week, so stay tuned for a full product review.
Josh Ebsworth
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I think there’s another perspective here that begins to reveal itself, and that’s the fact that many accounting professionals are worried about numbers, and small business owners need to understand what the numbers mean and what they can do about them.
Reducing costs and managing expenses and cashflow is critical, yes, but how many business owners actually know what they’ll be up against when looking for financing, or a buyer? Or do they even realize that they’re not on the path they wanted… building something valuable they can leave to the kids? Sure, the cashflow may be there, and they’re taking a healthy monthly salary… but does that really tell the entire picture or show them where they’re likely to end up? No, it doesn’t, and every accounting professional knows that truth.
While it’s true that bad accounting data turns into bad decisions really fast,it’s also true that too many accounting professionals THINK their client’s don’t care about what the numbers SAY just because they don’t care about the numbers. I would suggest that maybe small business owners care far more than their accounting professionals recognize… and they care about building value and not just accurate digits.
You pose the question: could bodetree hurt your business? Hmmm. that’s sort of like asking if trying to figure out what you’re worth (or not, as the case may be) will hurt your business.
Sure, monitor KPIs and crunch the numbers, show cash flow (real cash flow, not just today’s bank balance). But if you had 1 hour per week to actually spend working on the business, trying to make sure you’re heading where you originally planned to go with it, wouldn’t it be nice to get some idea where to start? Is your accountant doing this for you, or just preparing a nice tax return? Make no mistake about it… a buyer or a bank would see things differently. And one day, every business owner is going to talk to a buyer or a bank.
Accounting professionals should look at BodeTree-like tools as something they can use to help build value in the information they develop, rather than trying to convince clients that the value IS the information and not the guidance it suggests.
http://coopermann.com/2013/02/19/bookkeeping-and-benchmarks-getting-the-numbers-right/
I feel I can speak for the majority of small business owners when I say that I wish Bode Tree would have been around 25 years ago. Knowledge of your chosen field or industry is only one part of a successful business experience. Knowledge of the numbers via Bode Tree has made my current business experience more fun, more productive and definitely more successful. A previous busines I was involved in back in the early 80′s failed for exactly the reasons being discussed here, we were very good at what we did but had no idea not only what the numbers were but what they meant. Randomn meetings with the accountant throughout the year with a panic get together around tax time were not pleasant or effective.
Bode Tree software allows us to perform and function like a much larger company without the cost of a full time CFO. It’s truly proved to be a win, win for all concerns, our bank loves it, our accountant appreciates and utilizes all of the information, and we are now intimately involved on a daily basis with the strength, needs, and overall lanscape of our most precious entity our small business. $500.00 annually is the best money we spend all year. Thanks Bode Tree!!
Joe Ritz / Owner
Hi Joanie,
Thanks for your response. You raise an interesting point about using software like BodeTree to use as an aid when talking to the bank or potential financiers.
I also accept that BodeTree’s ways of displaying information could be used by accounting professionals to show small business owners what their data says.
But what about the DIYers out there who BodeTree seems to be appealing to i.e the people that hate finance?
I’m worried that inexperienced small business owners (and not the professional accountants) might rely on BodeTree too heavily. I get that small business owners want to build value, but faulty assumptions could lead BodeTree to give faulty advice that could end up reducing the value of their business.
I agree with the point that your blog makes; that accounting professionals are essential to the running of any business. But BodeTree doesn’t mention that on their site. In their example of Jill and her Ice Cream store, Jill does all the work on her own.
—Josh