THE BLOG
08/17/2016 09:17 am ET Updated Dec 06, 2017

The Truth About Hiring Friends in Your Small Business

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Hiring friends must be done with care to be successful.

Small business ideas are often mulled over by friends long before you take the plunge and say, "I've made the decision. I'm starting my own business." Friends' reactions may range from encouragement to total negativity, but there's a good chance at least one friend might be interested in working for you or with you.

While mixing business with friendship can work out, many people choose to keep business separate from friendships. Business relationships gone sour can ruin relationships, and some people avoid this risk by starting out with a "no hiring friends" policy. Most people fall between the two extremes of wanting to hire friends and refusing to do so. With strict boundaries, it's possible to successfully hire friends for your business.

Hiring a Friend Will Be Fine, Right?

Maybe? After deciding to start your own business, it's intuitive that many people want friends on board to help build the business. And since close friends tend to be vocal supporters of your ideas, and may be willing to work long hours with little or no pay it makes the choice a quick solution.

Your friends know you, and you know them, for better or worse, and this can add value to the business relationship. If your friends are great at bringing out the best in you, it stands to reason that this would be good for business too. Just make sure that before hiring friends, you consider tried and tested ideas for managing your business.

As a small business owner, it's your responsibility to be the leader, and to realize that hiring friends does not always work out for the better. While hiring friends without due consideration can ruin friendships, doing it with foresight and transparency can make good friendships even stronger. Before you consider hiring a friend, it's important you meet with them and talk about what will be different when you're the boss.

Your role as leader is as important in an informal business environment as any other, and you have to have a plan for things not working out. Start out knowing that you can fire your friend, should it come to that. It is essential before you consider bringing a friend into your business. And firing a friend when you have a set evaluation process doesn't necessarily have to end the friendship. When you are honest from the start, communicate regularly, and end the business relationship before it has a chance to become too contentious. Hopefully, in time you can be close again.

Before you hire anyone, however, you should develop a hiring policy that applies to everyone and makes your expectations clear. Furthermore, you should demonstrate your policies and treat everyone the same noting that your business is a meritocracy. Be clear that you expect your friends to be legitimately qualified for any job with your firm.

Be Careful About Hiring A Friend in Need

If your friend is going through difficult times, and can fulfill a role in your business, there's nothing wrong with hiring them. Whether you have them doing graphic design, running a cash register, or cleaning after hours, your expectations must be clear. Hiring the friend who is chronically in difficult situations due to poor life choices must be avoided. Give them a loan or a gift of some transition money. Don't feel obligated to hire someone who isn't capable of making good decisions, because their actions will affect your company.

Is it OK to Avoid Hiring Friends Altogether?

Yes! Some people believe you should never hire someone you can't fire or that hiring friends is not worth the risk. Keeping business and friendship separate, especially when one friend is the boss, may be best. Not all equality-based relationships withstand the additional pressure of a struggling small business. What's more, hiring a friend can cause existing employees to assume an alliance will form between you and your friend. Resentment can result. There's nothing wrong with starting out your business with a "no hiring friends" policy and sticking with it.

If you start a business and develop a strong hiring policy, then you can possibly mix business and friendship successfully. For more small business ideas, grab a copy of the Become Your Own Boss Workbook, where you'll discover a clear, methodical guide for making your small business dream into reality.

This post was originally published as The Truth About Hiring Your Friends In Your Small Business