Do NOT Hire a Close Friend to Work in Your Business

Here is an advice for all small business owners – DO NOT HIRE FRIEND OR RELATIVE TO WORK IN YOUR BUSINESS, if at all possible. I know it sounds harsh and may be even counter-intuitive. After all, in small business you need someone who you can trust with your money and who else would be better suited than a close friend or a relative who you know very well and can trust.

I am not arguing with the benefits of having a trusted friend or relative in the business who can watch for your good. However, you have to weigh this against the downsides that come with it. From what we have seen and experienced the downsides exceed the benefits; which calls for avoiding the situation, if possible.

So what are the problems and issues that come along with the hiring of a close friend or a relative in your business? Wall Street has good examples of the problems here. Here is my list based on my experience and that of some of our business colleagues:

• Mixing of personal and business lives
  I am sure you have heard this many times – do not mix business with personal lives. The reasons are quite obvious. Whenever you mix business and personal lives one of the two gets affected. The decisions made in business situation can have an impact on personal relationship and vice versa. You end up being in a situation where you have to make a compromise and that is best to avoid.
• Cannot be straightforward with friend or relative
  Those who are married can relate to this well. If you have to say something unpleasant to your spouse the better approach is to say it tactfully than be blunt about it. After all, you don’t want to hurt his/her feelings and make the situation out of control. Guess what – it doesn’t work when you are running the business. You have to be blunt about the things you want from your employees or business partners and you can be sure that this will strain the relationship with your friend or relative. I know of several colleagues who have lost good friends after being in this type of situation.
• Employees may feel you are playing favorites with your friend
  We have come across many situations where the employees will feel or say – why don’t you demand the same outcome from your friend or relative who is supposed to do the same job as I do; but doesn’t. They will not give their best to your business if they feel that you will always favor your friend or relative no matter how hard they work.
• Can create awkward situations with finances
  So here is a scenario. Your friend or relative who works in your business comes to you and says he is going through hard times and needs extra money to pay his bills. On the other hand you are in a bit of cash crunch yourself in the business and cannot afford to spend an extra dime. What do you do? Do you give extra money to friend and let the business suffer or do you decline to your friend to help out the business and lose friendship. Well, you get the picture. It’s best to avoid being in this situation in the first place.
What do you think? How has your experience been in the past? Be sure to share your stories – positive or negative.