How Does a CFO Differ from an Accountant in Small Business with Rush Shah

Welcome to the B2B Growth Blueprint podcast, where we talk with entrepreneurs, founders, and leaders at B2B services, tech, and SaaS companies to learn the systems and processes they've used to create success for their business. And we'll also learn from marketing and sales experts to provide insights to help you grow your business. I'm your host, Mark Osborne. And the podcast is brought to you by Modern Revenue Strategies and their 10x ROI B2B Growth Guarantee. Schedule a free diagnostic call to learn the fastest path to double your B2B revenues in just 90 days. Hello and welcome to another episode of the B2B Growth Blueprint Podcast. I'm your host, Mark Osborne, and today I'm very excited to welcome my guest, Rush Shah. Rush is the founder and CEO of Modern CFO. He's an accomplished CFO in his own right and strategic finance partner with more than 20 years of experience helping business owners turn financial complexity into clarity. He founded Modern CFO to help founders escape the chief everything officer trap, and he uses finance as a forward-looking decision tool, not just a reporting function. Across his career, Rush has led financial strategy for companies totaling over $150 million in revenue, managing more than $30 million in M&A transactions, and advised numerous high-growth businesses on sustainable growth, cost optimization, and cash flow discipline. His background spans professional services and healthcare, including senior leadership roles at Kaiser Permanente and Providence, and serving as CFO of Napa Center, a multi-location global healthcare organization. He holds an MBA in finance from San Francisco State University and a BA in economics from the University of Texas at Austin. Today, he works with founders who want smarter decisions, stronger fundamentals, and a business built to last, not just grow. So Rush, welcome to the show.

Thank you. Thank you for your time, Mark.

Yeah, I've been looking forward to our conversation. Before we jump into some of the topics that we've been chatting about, why don't you give our audience a little bit of background? Like, tell them about sort of your story and the twists and turns of your career.

Sure. Yeah, I'll start early on. I mean, I grew up in Dallas, Texas, but, you know, most of my life. So grew up there, went to college in Austin, as you had heard earlier, and then started my corporate career in San Francisco. I was working in the banking side the business, spent numerous years in finance over there. And then a shift happened where I wanted to try something different in a different industry. And so I took some time to work in healthcare. So as you saw the names of Kaiser Permanente and Providence, so spent a career there for another 10-plus years. And around COVID, I decided I wanted to kind of test my own waters and see where I wanted to go. So instead of just taking the corporate route, I got to work for a smaller company, NAPA Center. And so there I came as their first CFO. We more than tripled the company from the size of the 2 years I was there. And then, yeah, then I started my own journey about 2 years ago. Decided after working with this company, I realized that small businesses are just, you know, many, many of them struggle sometimes, right? They don't know what path to go on, especially in the early range between the $1 to $30 million. We're just trying to figure out what growth looks like and how to kind of gain the momentum they want. And so that's where I started. That's how I decided to start my business, to help small businesses grow and succeed. Yeah.

That's great. So I'm curious, just sort of, you know, since you teased it up, what are some of the sort of big— biggest aha moments you had and sort of through those 2 transitions? So going from, you know, working in large corporate environments, working for a smaller company, that rapid growth doubling in, I think you said a year or 2. And then also maybe some other sort of insights that you've had just as you've worked with more smaller businesses. Anything that sort of stands out to you there?

Yeah, you know, I think it's the burden that you face sometimes, right? I think in corporate finance, the burden is a little bit different than when you own your own company, in my view. And I'm a business owner myself now. I totally get how difficult it is owning a business. Right? And so in a corporate environment, I mean, you're learning, right? You're getting the training you need to succeed in life. You're learning how to manage people. You're learning how to manage teams. You're learning how to make major, major decisions, you know, sometimes multi-millions, billions of dollars sometimes even, right? And so it's a good foundation to create the leadership skills that you need to be successful later on in life. But when you come to a small business, every decision you make can be a difference between staying afloat tomorrow or maybe running out of cash right away. And every decision comes on you, right? You do become a chief everything officer. And so you don't have the bandwidth of the complexity of having a full HR department and having a full finance and marketing team departments at your mercy. You're sometimes doing it on your own or trying to figure it out on your own. And so there's a lot of burden that comes with it from that standpoint. And so without the right team in place, Yeah, it's a lonely place to be, even more isolating when you don't know where to go, right? So that's one of the biggest differences that I've learned from my journey into entrepreneurship.

But what an interesting time though, you know, like yourself, I also function as like an outsourced, you know, leadership for CEOs. CEOs have so much more flexibility now, whereas in the past they would have had to, you You know, build their founding team if they wanted that financial expertise. Whereas now they can go out and find someone like yourself on, you know, not a full-time basis. They don't have to make this long-term commitment to you, spend so much time going through the stress of looking for those co-founders.

Absolutely. And I think, you know, things have shifted, right? From years ago, you know, the idea was to hire a full-time hire and that's all that maybe someone could afford. But those are expensive and maybe you don't need have that full need, but you need some of that expertise and knowledge, right?

Right.

And so that's where that fractional realm comes in. It allows you to have that full knowledge of somebody, but at a fraction of the cost of a full-time hire, so that you can make the structure of what you need to build your business early on and not make any mistakes early that you would have to deal with much later.

Yeah. So I know me personally, I don't really gravitate towards the financial aspects of the business. And that's something that I've oftentimes relied on external expertise. And so, I know other CEOs that might be listening, you know, have the same perspective, but maybe they are starting to get to that point where they've been the chief everything officer for maybe a little too long. They now need to start bringing in some external experience. But as they look at the sort of financial resources or, you know, sort of support that exists, They're like, well, do I need an accountant or do I really need a CFO? Or what's the difference between the two? You have so much background and expertise. Give us a little bit of a primer there. What's that real difference? How should CEOs think about that difference and make decisions around who they need?

Yeah, great question. I think you first have to establish what exactly you need and the role of each one, right? So number one, you've got to have good books no matter what you do. So I would not ever skip on the accounting piece at all. But you have to learn or understand what the role of an accountant is versus what the role of a CFO would be from that perspective, particularly around a small business, right? And so the accountant is fully focused on, you know, compliance, really, guidance, right? Making sure that you're GAAP compliant, making sure that things are put in the right place, that your financials are available for you to review, to make sure there's no expenses in the revenue category and vice versa. But the role of a CFO is much more strategic, is forward-looking, and, and they're 2 very different hats. And the example that I like to give to, to business owners, like, if you think of your business as a car, right, and you're the driver and you want to get to a destination, like every business owner wants to get to a destination, right? You know, if all you had was a rearview mirror, how far do you think you're gonna get?

Yeah.

Not far. I haven't— I don't usually drive with a rearview mirror, looking in the rearview mirror, right?

Yeah.

But I mean, it's a crucial piece, don't get me wrong, but you can't use that piece to guide your business in the direction you want to go. It's helpful information, but past performance doesn't dictate future performance, right?

Yeah.

And so the biggest struggle I see business owners are so caught up in financials and information And sometimes their accounting team gives them nice fancy dashboards and really graphs and all kinds of nice, wonderful things to have, but it doesn't tell you the story. You know, it's like, hey, here's where you're at right now. And if you're the owner, like, great, I made money today. Where am I gonna be a year from now? Am I gonna make it?

Right.

Or my cash flow looks good. My cash flow looks low. Okay, great. Now what? What do I do? And so, you know, the idea behind the CFO is really more of that GPS, that guidance, right? And, and what I do with my clients is we always start with the end goal in mind. What is the destination we want to go to? What is— what's the final outcome we want? And then we navigate towards that, right? So if we're taking a left turn or a right turn and we're off path, my goal is to get them back on the path to make sure that we never lose sight of our destination. So that's the big difference between an accountant and a CFO. One is hindsight, one is foresight, and I always tell individuals, look, in your car, that GPS and rearview mirror are never the same unit. They're 2 separate, completely separate different things in your car. And in your business, they should be very separate too. You know, I always tell people, look, accountants make the worst CFOs trying to do both, and CFOs make the worst accountants trying to do both, because this is very different items. So make sure there's the right people doing the right things in your business.

So you've definitely established that it's, you know, it's a must-do to have, you know, your books in order and so to have that sort of accounting and clean data. As folks are driving down the road and thinking like, boy, I could sure use a GPS. But, you know, they're trying to balance priorities and thinking, thinking about, well, I could also use keeping the lights on for another few months. Are there some key inflection points or times that it makes it really obvious that like now is the right time to bring in that external expertise?

The best time to bring an expert is when things are good. The worst time to bring an expert is when things are bad. And because think about it, by the time you're, you know, a business doesn't go into downward spiral overnight.

Right.

There are so many cascading factors that happen to get you to where you want to be. It could be the change in the economy. It could be just the way things were managed. But there were steps, you know, that there was visibility early on that either chose to be ignored or you just didn't see yourself, but they were there. All right. And so we oftentimes forget that when things are good, they're great. You know, I often tell people, look, when When the party's happening, everybody can party in Vegas. Great. The question is, will you be the last one standing? Right.

Picking up the tab.

And picking up the tab, right? Yeah, because you want to be, you want to be there sustaining for the long run, but you need the right people to help you out. And so that's what the role of a CFO, right, as I mentioned, is about forecasting for the future, but making sure that the company is sustainable long run. Right. When I, when I work with clients, we're creating multiple forecast scenarios. I'm, you know, I tell people, you know, prepare, you know, plan for the best and prepare for the worst. Right. We're going to make best-case scenarios, but boy, I'm going to have a worst-case scenario out there as well, just in case things don't go the way we want. But we're going to be prepared. That's the big difference. And by the time your business is cascading down to the very bare minimums, you can't probably— you can't even probably afford a full-time CFO or part-time CFO or anybody on your team.

Right. So what are some of those kind of early warning signals that people miss that, you know, if they had had that sort of, they would have been able to pick up on it and anticipate some of those downward spirals?

Yeah, a couple of things, right? Oftentimes we look for pipeline solutions. When sales go down, we want to get marketing, for example, pick sales back up. But we have yet to fix the operational issues around, well, you know, why sales dipped in the first place, right? We're looking for top-flight solutions and granted they're good. You know, it's great to have marketing, but the best time to have marketing is when things are great because you want to do better, not when things are at the worst place possible to get marketing because it's already, you know, things are in a downward spiral, right?

Yeah.

So, you know, you have to market for the right reasons. And if you don't have a good infrastructure yet, you're spending money on marketing. you're gonna be in the same place anyway. You know, marketing will generate a whole bunch of leads, but when those leads come through the pipeline and you don't have the infrastructure to do it, it doesn't convert to sales. And now you're wondering, well, why didn't it convert to sales? So, you know, the focus should be on infrastructure, making sure you're set up for success early on and not trying to fix the top line issue. But you have to do a deep dive root cause analysis on what is really causing it, the things to be. And that just requires knowledge and oftentimes data and someone to, to really give an outside perspective on things. Right.

Yeah, that's so true. Well, and we see that, you know, from the marketing and sales side so often where, you know, we'll ask a company about, you know, what do their revenues look like? And they'll talk about, well, we closed these deals. And I'm like, well, that's not all your revenue. Those are the deals that you close. But how are your renewals looking? How is your expansion looking? They're like, oh, that's not marketing and sales problem, that's operations problem. I'm like, Well, but if you've got a leaky bucket, it doesn't make sense to pour more water into it until we fix those leaks. And so, yeah, we oftentimes see those same issues from a revenue perspective, much less from the finance.

Yeah, Mark, you bring up a really good point, right? The leaky bucket problem, right? And oftentimes, I, you know, revenue is just one number to have. It's a top-line number that everybody likes to have and boast about. But there are plenty of companies I've seen, publicly traded companies with fantastic revenue numbers, and yet they go bankrupt.

Yeah.

Why? Why could that be? Because they don't, they're not managing their cash, right?

Right.

You know, as the adage that I like to use is, you know, revenue is vanity, profit is sanity, cash is king at the end of the day. So focus on your cash, but they're all interlinked. It's not like you don't need revenue. You need revenue, you need growth 110%. You need that, but it also has to match with Profits, managing the efficiency of your organization, and manage it by cash, managing cash so that you can reinvest back in your business. So it's a full cycle of things that you need.

Yeah, well, in that thinking through the actual profitability by lines of business, by different sort of customers that you serve, by different markets that you play in, you know, we've certainly seen the scenario where Companies sort of get in this mindset of, oh, it's a land grab. You know, it's whoever sort of gets the most customers right now is the one that's ultimately going to win. And so for every new customer they bring in, they're losing money. And so it's this sort of growth at all costs kind of mindset, which, you know, really isn't sort of sustainable or, you know, certainly not scalable. As you work with companies, how do you help them uncover and recognize where they might be falling into some of those traps of maybe it's unprofitable customers or just inefficient processes that are, you know, leading them to not really be operating with that profit?

Yeah, I think you had the question, what kind of company are you? And the reason why I asked was that a tech company functions a lot different than a service-based business, right? You know, Tech, it could be whatever it is, is world domination for a specific market, you know, VC funding, spend at all costs, go dominate the market as fast as you can and go from there, right? A service-based business. So, you know, first of all, you're not gonna go global overnight. It doesn't work that fast.

Right.

And so you have to identify, well, what does that growth look like? What does that marketing look like? And what are you really trying to achieve? Right. Because the, the, the trajectory of the cyberspace is just different. Is this, you know, and you can't treat the 2 different perspectives, right? It's a different market, let's be honest. And so the question is, what do you, you know, the question you have to ask yourself, what are you looking to achieve ultimately? And then what does success look like to achieve that piece, right? And then identifying the key components you need. Sometimes we market to a wrong, wrong place because we thought that's where we should go, or historical data showed that we should go here, but that was 2 years ago. Well, fads change, right? What worked 2 years ago isn't gonna be working right now. So you have to learn how to adjust to the market and also diversify your products from that perspective, right? Knowing what— where you should focus in on. But all of that, Mark, honestly takes analysis. You have to have good data. You have to know what to look at. And I do this with my clients. All the time. We slice and dice every type of data there is because it tells us what's working, what's not. And it tells us, hey, we should focus on marketing here. Look, this is doing really, really well, right? Or hey, there's an opportunity here. This one has a higher margin. Why are we not going after this high margin part of our business? All right. How do we make that more efficient? How do we grow that piece? So, you know, you gotta know your business.

Yeah, when it all stems from that data. And one of the places where this data starts to be really important, and actually it's sort of how you and I met through the Exit Planning Institute and sort of thinking about, you know, as companies prepare to, you know, sort of sell and exit. But oftentimes it's, you know, as you talked about, beginning with that end in mind of knowing where they're going and how they want to get there, that sort of then guides the strategies that they and act today. But what are some of the things that you see that are different for a company that might have on their mind to exit in the next 1 to 5 years versus a company that is just trying to grow and scale and maybe they'll sell it at some point in the future? Are there some key differences in the way that you approach the CFO role for companies in those different contexts?

Partly yes and partly no. I mean, one part is always start with the end goal in mind. The moment you start your business, you should be thinking about an exit plan.

Sure.

So it's not, hey, I plan to exit in 10 years or 20 years or whatever it is. No, think about to this day what your ultimate goal is, right? And I think a lot of us, you know, myself included, right? Like we don't think, you know, we build a business for whatever steady income, whatever purpose that is, but It should start with the end goal in mind because the truth is we're not gonna be working forever, right? It's not possible. That's just how life is. So at some point, wherever distant future it is, gotta have an exit plan, right? But typically, you know, oftentimes when you do have that one time, you know, timeframe, right? One of my key learnings as we looked into why businesses, people sell their businesses, they have 3 ways to do it, right? One is by choice, right? They're like, hey, look, I'm choosing to sell my business because I want a different lifestyle, right? The other one could be because you're forced to sell. Things are looking bad, you're not in the best place on it, and you just want to get out, right? And the third are life events, whether it be death, destruction, or divorce, or whatever happens, right?

Yeah.

Of those 3 things I listed, 2 of them are not by choice, right? And you never want to be in that position.

Yeah, I've heard that 50% of all entrepreneurs will be forced to sell when they weren't planning to. And I bet that number probably, you know, changes even more for people that are in high-risk or volatile businesses because as you said, like, Just the decline in the business sort of forces you to have to sell.

Well, it's the worst time to sell. Who wants to buy a business when it's deteriorating?

That's right. That's right.

Right? Like, if you don't see potential in it. Yes, you know, but you're looking for, you know, a diamond in the rough sometimes, right? You're looking for, oh, hey, you know, will this business succeed? And it's a risk you take, but not many people want to take that risk, right? And so, yes, you want to be at a place where you can sell your business by choice, right? And 2, oftentimes not every business is gonna get sold. I read a stat that almost 80% don't get sold, and I don't know if that's what you—

Yeah, I've seen that same stat.

Yeah, I mean, 1 in 5, right? It only gets sold. The other 4 don't. That is, you're forced to sell and nobody's buying your business. That is the worst place you want to be.

Yeah.

Right. So what can we do, right, from that standpoint? And again, it starts with the structure. Start with your end goal in mind, right? Build the structure, build the infrastructure of your business as if you're planning to sell it at any given point. Don't— it's not, oh, I'll do it tomorrow. Oh, I'll do it. I'll create it. No, plan it like 10 years from now. Build these structures that you need. Um, from that standpoint, um, you know, what else? Give me an idea. What else are you seeing from your standpoint? A lot, you know, I have some other ideas on what else we can do, but what are you seeing from the Exit Planning Institute that you find from that perspective?

Very similar is that, you know, that again, most entrepreneurs will be forced to sell when they're not, uh, when it's not voluntary. And it's 70% of those that try to sell Um, won't be able to, or even 80, uh, as some stats. And then the other startling statistic that, that, you know, sort of pairs with that is that for most entrepreneurs, they haven't built, you know, sort of financial safety nets outside of their business because, you know, they, they don't have a 401 matching that their employer is, uh, putting into. And every time they think about, well, should I put money in the stock market? Where I'm going to give it to some other entrepreneur and trust that they're going to make good decisions, or should I put it in my business where I have complete control over the decisions? They oftentimes will sort of choose here. So, with 70% of their wealth is tied into this asset that they've got a 50% probability that they'll have to sell without— when they're not ready, and that 70% of the time or 80% of the time won't sell.

Yeah.

That puts a lot of risk, which just makes that much more focus on why they should always be thinking about that eventual exit and planning for that end from the very beginning, just as you said.

Yeah, I always ask people when they have a business, what are you looking to accomplish, right? There is a difference between running a business and building a business.

Yeah.

You know, I often say, look, running a business pays the bills, right? If that's your goal, run the business, pay the bills, and that's where you want to be at, great. But the real wealth in your business comes from building a business. Building a business creates wealth.

Yeah.

But they're very two different functions, right? And they require very two different skill sets and the ability to Leverage that, right? When you're looking to build a business, you have to think from the outside perspective in. If somebody's gonna buy your business, why would they wanna buy it? What makes it attractive for them to buy it? And I often give the ideas like, look, if someone has a shack and someone has this mansion that's staged, which one's gonna command a premium price for you?

Yeah.

Right? Yeah, do it yourself. Here you go. I'll put on a discount for you because you're gonna build it yourself. Or hey, here I have a mansion that's working for you, ready to go. Here's a premium price that you can sell it for. And so what I'd mentioned too is one structure we talked about. 2 is stability. You know, buyers want to see stability in what they're buying, right? We don't want cash flows up and down and all over the place, and they have no idea what tomorrow's gonna look like, whether they're gonna buy your business and be bankrupt tomorrow. No one's gonna buy your business if that's the case.

That's right.

So they want stability in the business. Not stability just from cash flow, but also stability in structures, right? If you have a high turnover business, do you think they're gonna want it, you know, business where they manage people, right, from that perspective? So create a stability within your business and build a structure around that piece as well.

Yeah, so true. Well, Rush, you're obviously an expert in a lot of things that are super interesting, and we could talk all day, but I got to be mindful of your time. But Before I let you go, like, kind of give us the pitch. Who, who do you work with specifically and what kind of benefits do they get from working with you?

Yeah, we work with service-based businesses that are between $1 million to $30 million revenue or just looking to grow from that perspective. Oftentimes the area that we help out is when they don't have a CFO to guide them through the financial areas that they want to be, where they want to grow, right? Oftentimes they'll have an accountant, but they're missing that strategic part for it. Often a lot of many of the companies I'm looking for are looking to eventually sell, but long-term ahead, not right now. So really we're building the infrastructure for them to grow their business, improve the valuation of the company. That's by improving profits, improving revenues, improving cash flow, and all the different things combined so that they're ready for a sale eventually.

Fantastic. And what's the best way for folks to get in touch with you?

You can email me at rush@moderncfoservices.com. I'm also on LinkedIn under Rush Shah Modern CFO as a company name, or my website moderncfoservices.com.

Well, Rush, thank you so much for taking the time to join us today. I really enjoyed our conversation.

Appreciate it. Hey, thank you so much, Mark. Thank you for your time.

Talk to you soon.

Thank you. Bye.

Thank you for joining this episode of the B2B Growth Blueprint podcast. We hope you've gained insights to grow your business. If you enjoyed this discussion, please rate, comment, like on your favorite platform, and share to others who will find it useful. Do you know a CEO, founder, or leader at an early stage B2B services, tech, or SaaS company who would like to be a guest and share their story, send us a note. Let's schedule a conversation.