THERE'S NO GETTING around it: once you start selling stock to the general public, you start to lose one of the fundamental benefits of being an entrepreneur -- control. "I'm an entrepreneur, first and foremost," says Galen Heatherly, whose SpoolMaster Co., which he founded in 1988, uses outsourcing to deliver customized spools and reel-handling equipment for storing and using cables and wire. His clients range from local power companies to Intel. So far, staying private has paid off: during the past two to three years, Heatherly says, he has grown his company by almost 50 percent without having to be concerned about pleasing his shareholders with strong growth in the short term. "I don't want to lose control of the company and have to worry about how every decision I make is going to affect my stockholders rather than my long-term plans."

A NEW SET OF RESPONSIBILITIES

IT'S NOT ONLY your shareholders that you have to worry about. According to Kenan E. Sahin, Ph.D., founder and president of privately held Kenan Systems, which supplies operations-and-management-support software systems to companies such as AT&T, the heads of many public companies wind up having to please what can seem like an even more fickle audience, namely, stock-market analysts. "What happens with public companies is similar to what happens in politics, where the analysts set the barriers and shape the competition between the candidates," says Sahin, who spent 14 years teaching at the Massachusetts Institute of Technology before founding his own company in 1982. "Wall Street is attached to the positions of the analysts, who take stands on how much a company is going to grow and what they are going to do. Ultimately these pronouncements begin to impact the management of a company fundamentally; in the same way, politicians are driven largely by what the media are saying."

And just as a politician has to be concerned about his day-to-day poll numbers, the head of a public company needs to be concerned about his quarterly-earnings numbers. "To be successful as a public company, you have to maintain a consistent growth rate of 20 to 25 percent," says William L. Haeberle, professor emeritus of management at Indiana University at Bloomington's Kelly School of Business. "If you don't have that, you don't have the following that causes your stock to have an improving price." And that, say entrepreneurs who've chosen to stay private, is the biggest reason why they don't want to go public. They want to satisfy themselves instead of a bunch of Wall Street bean counters.

NO SECRETS

"SMART COMPANIES STAY private," says William B. Gartner, holder of the Henry W. Simonsen Chair of Entrepreneurship at the University of Southern California's Marshall School of Business. Aside from the issue of control, one of his strongest arguments against going public is the heightened demand for disclosure. As you are undoubtedly aware, public companies are required to report reams of information (itself a time-consuming and expensive proposition) to the public. And, guess what? Your competition is part of that audience. So, assuming you get past the first hurdle and manage to keep your company from being the featured "big loser" on the evening business report, your competitors will have a pretty good idea how you were able to do it. "Once you go public, there are phenomenal reporting requirements that most entrepreneurs underestimate, and you have a responsibility to report everything that happens to you, both good and bad," says Haeberle.

NO FLEXIBILITY

WHEN YOUR COMPANY is private, you have a lot more freedom to take it where you want, since yours is the only vision you need to satisfy. "I see some private companies that manage one way or another to pull together wholly owned subsidiaries in unrelated businesses that just make a heck of a lot of money," says Haeberle. "If they did this in a public company, they would confuse the hell out of analysts and not get the price they deserve."

LEGAL SQUABBLES

GIVEN ALL THESE requirements for publicly held companies, it's not surprising that many entrepreneurs end up in court. Remember that while a lot of people consider the stock market to be just another form of legalized gambling, there's one thing that makes it different. If you lose a hand of blackjack, you can't sue the casino. "One of the biggest problems for anyone running a publicly held company is the danger that something will happen to spook the market, and the stock will tumble," says Sahin.

Unfortunately for many entrepreneurs who find themselves sitting at the helm of a publicly held firm, that is also when the subpoenas are likely to arrive. If it can be demonstrated in court that, as an officer of the company, you somehow mismanaged yourself or misled the public, then you can be held personally responsible,

And don't be too sure that a judge and jury will see your side of things if a gang of disgruntled shareholders shows up in court. Considering all the hoops you have to jump through, it's not tough for a good class-action attorney to convince a jury that you're in the wrong. According to Gartner, many entrepreneurs lose such suits, and, very often, they can be unbelievably costly.

And even if you're never sued, you're still more likely to be subject to embarrassment at the hands of stockholders. Just think of GM CEO Roger Smith's being forced to endure Michael (Roger & Me) Moore's turning up at that shareholder meeting with a videocamera. Or think of the Time Warner board's having to listen to angry parents read them the lyrics to rap songs in a hotel ballroom. Again, what it comes down to, says Gartner, is that "if you're private, what you do is essentially your own, business, so long as your customers remain satisfied."

EMPLOYEE TROUBLE

IF ALL THIS talk about the problems you can encounter with shareholders hasn't dampened your dreams of getting rich off an initial public offering, keep in mind that your relationship with your employees will change seriously, too. In fact, when it comes to relations between the entrepreneur and his employee, going public can be the worst thing in the world -- especially, says Sahin, if your staff starts getting paid in stock options. "When public companies use stock and stock options as a form of compensation, then everything becomes distorted. Employees become obsessed with the price of the stock instead of thinking about the customer."

To put it another way, workers start looking at their bosses not as the guys in charge but as their money managers, and everyone in the operation soon thinks only about reporting the bottom line to Wall Street at the end of the quarter. Anyone familiar with recent Silicon Valley history knows that the landscape is littered with the carcasses of start-ups that failed to meet the Street's expectations and eventually became extinct before their time. By not getting his employees involved in any complicated compensation schemes, Sahin feels, he has been able not only to manage his people more effectively but to grow his company as well. Kenan Systems today employs 450 people in offices as far away as Singapore and London, and Sahin predicts that the number will increase by another 50 percent over the course of 1998, with revenue rising in the same proportion.

TOO MUCH OF A GOOD THING?