Bob Flaherty was used to working until midnight, six-day week after six-day week, with only the occasional weekend break. He had thought he couldn't work any harder -- until three years ago, when he switched from writing about business to actually running one.

On Friday, February 13, 1981, with $100,000 borrowed from a friend, Flaherty bought three publications -- a magazine and two newsletters, all floundering -- which he consolidated into Review Publishing Corp. of Oreland, Pa. Now sometimes he works until 4 a.m., a six-and-a-half-day week, with no time off. And he has new respect for the pressures that weigh on an executive. "It's been much more intense than I ever imagined," he admits happily. "When I was at Forbes [magazine], I laughed when the president of RCA was forced to resign for not filing his income taxes. He hadn't been evading them, and he didn't owe much. He was just too busy. It was inconceivable to me how that happened. And now I have extensions on my own taxes."

The transformation of Bob Flaherty, journalist, into Bob Flaherty, chief executive officer, has been a series of similar lessons. But he has been an exceptional student. Launched in the early 1950s by the late Ralph Coleman Jr., OTC Review and the two newsletters were little more than an adjunct to Coleman's mutual fund when Flaherty took over. The publications had never been profitable. Cash receipts were down to $134,000 collectively for the preceding year. Subscriptions to the magazine had fallen to 5,007.

Flaherty turned the company around. In three years, circulation for OTC Review has quadrupled, up to over 20,000; advertising revenue is up tenfold. Newsletter subscribers have tripled. Cash receipts have risen to $1.2 million; in 1984, he expects a $1.7-million year and the company's first entry into the black. Flaherty has been labeled "a guru of the OTC" in the press and was feted on the television program "Wall Street Week" on his fiftieth birthday. This past June, after living off a retirement fund that dwindled from $190,000 to $13,000, he was able to put himself on salary.

Actually running a business, however, turned out to be different from writing about one, and far more demanding than Flaherty had ever expected."I didn't appreciate the speed at which a small business must move," he admits. "Your capital and your people resources are limited. So when you commit them, you need to get results quickly in order to have recycled resources to commit again.

"I didn't understand how some executives could involve themselves in what appeared to be routine and uncreative tasks. Now I see that in every major spending decision, you are betting the company. That makes the ordinary exciting. Danger makes me feel alive in a way I never dreamed possible.

"I assumed that as owner I would have a much greater degree of control over the company and the results than I actually do. Frankly, it's been a shock."

By age 47, Flaherty was ready for a professional change. As a senior editor at Forbes, a national award winner, and author of 33 cover stories for the magazine, he had reached the summit of business journalism, respected by both his peers and the executives whose careers he chronicled. But after 20 years as a reporter, he had lost his enthusiasm. He felt that he had gone as far as he could go in his job, and missed the early days, the excitement of a start-up, when the magazine staff was small and his work was crucial. "I'd personally done five articles on U.S. Steel," he relates. "I wasn't looking forward to the sixth."

Although his friends argued that Review Publishing would bankrupt him, Flaherty -- who had tried to buy a magazine twice before -- was convinced he could make it work. "As a financial writer, I had probably interviewed more CEOs than anyone else in the country," he reasoned. "That was like a course in top management." With OTC Review, he would have an exclusive eye on the volatile small issues that no other publication covered. He would be the shareholders' friend, a paragon of taste and honesty. People, he assumed, would be eager to read what he wrote. Backers would be eager to fund him.

Flaherty's first collision with reality came with capital. "When I started, I assumed that, just because I had an MBA and a good record as a financial writer, people would shower me with money," he remembers. "They did not. Actually, people ran in the opposite direction." Rather than investing, a venture capitalist friend agreed to lend him $100,000, considerably less than the $1 million with which he had dreamed of beginning his business.

In retrospect, Flaherty feels, limited capital may have turned out to be a benefit; "if I'd started out with my million, I'd probably be bankrupt by now." Rather than setting up offices, he operated out of a back room in the offices of Coleman's mutual fund. Rather than buying all his advertising, he began to swap space with such publications as Financial World and Penny Stock News. Rather than long-range planning, he concentrated on cash flow.

Unable to pay writers national magazine-scale wages, he established a network of freelancers around the country, friends who had written for him before; his wife wrote an article for the first issue; another came from a friend as a Christmas gift. He expanded his pool by adding novices working out of their homes -- would-be writers more interested in working with a trained editor like Flaherty or in seeing their names in print than in receiving a large check. "It's a cottage-industry concept," Flaherty says, "a way to grow without capital."

Flaherty took his cottage-industry concept and spread it to the business side as well, hiring both a publisher and an ad representative who would work out of their homes rather than in his central office. Through his office manager, a member of the local Baptist Church, Flaherty brought in an army of teenagers and housewives to help with circulation-building mailings. To find specific help in problem areas, he looked for executives in the 50-to-80-year range, experts who had retired or been pushed aside in favor of younger talent -- a 61-year-old statistician, for example, and a circulation expert in his mid-70s, a fellow Forbes veteran. With his approach, Flaherty saves in two ways: Not only are these employees' wages as part-time workers less, but also, he explains, "if I had built and furnished offices for all of them, I'd probably need 10 times the space. I would have gone bankrupt."

"I always imagined that in running a company, the major part of your job was business policy over the long term," Flaherty says. "I took the short-term tasks, turning out the product, for granted. But I learned there is no long term unless you survive each day. It's exactly the minute details that no one touches that can cause the most problems."

Flaherty's first major problem was printing. OTC Review had been printed with hot type by an older man in what looked like a garage when Flaherty decided to convert to a computerized cold-type system. Flaherty took the low bid from a vendor using the more advanced technology. But rather than a better product at a lower cost, the magazine was filled with errors, and the bill was significantly higher.

After three months, Flaherty found a new printer, this time one with magazine experience, only to have a new problem arise. "The magazine took 20 to 30 days to get to a reader," says Flaherty. "It could have put me out of business." The answer came in the form of a postal worker who has his own mailing business on the side, an expert in the esoterica of zip coding and bagging. Now the magazine is delivered in 8 to 10 days.

As a journalist, Flaherty had disparaged the standard offer of free trial subscriptions, believing that an outstanding product would sell itself. "But people are much more reluctant to spend money on a product they don't know than I ever imagined," he says. Free trial subscriptions bring in readers, "and when you're actually doing the job, you do what works."

As a journalist, Flaherty had vowed that if he ever had a magazine, the date on the cover would be the date the magazine was printed, rather than, as is customary, some mythical date weeks ahead. "But I got all kinds of complaints from angry readers," he remembers "like, 'Time is a month ahead of you. What's wrong?' " Now OTC Review follows the convention.

For Bob Flaherty, CEO, however, the most important lessons have been in the burdens of leadership. "There's a whole rhythm that goes through an organization," he says. "The example one sets is noted. If I get afraid or tired -- or if I get my enthusiasm up -- these attitudes ripple down. It becomes important, if I'm having a bad day, not to spread it.

"I used to wonder why the majority of CEOs I met were so careful about what they said. Now I find my own people often put connotations on things I say or interpret my remarks in the darkest possible terms. So I have become more careful, too. I probably thought that I could inspire people more. I've always wanted to grow, and assumed everyone else did, too.

"Actually, people come to work for you for all sorts of reasons. Some want to grow; others just want a job. These people are just as vital to your operation, and you, as a manager, have to take that into account. It's unrealistic to expect individuals to conform to your private values.

"At Forbes, I thought a company head could build a dynasty. Now I think all the leader can do is run his reputation as best he can to fulfill his duty to his customers, employees, and investors. When you let go, it becomes somebody else's duty."

Not that Flaherty has any plans to let go. This past August, he added a new product, publishing his first edition of the OTC Review 500. In December, he organized the company's first financial seminar, and he plans to start his own mutual fund. His goal is to make Review Publishing a $50-million enterprise within the next 10 years.

"Finally I've got the credibility to raise money," he says, "the credibility I thought I'd have when I started." The friend who lent him the initial $100,000 "took us out of the charity category" and put in $300,000, and Flaherty is negotiating another $300,000 from a second group of investors. He has been approached by other magazines for acquisition and merger, but he is having too good a time at the reins to hand them over to someone else.

For Bob Flaherty, the most satisfying discovery has been in the satisfaction he finds sitting in the CEO's chair. There are still challenges to be met -- an accounting system in disarray, a lack of diversity that makes him too sensitive to market fluctuations, an excessive reliance on his personal skills -- but it is just those daily problems that make the long hours such an adventure. "I want to make this magazine live long after I'm gone," he says happily. "I hope I'll die at my desk."