Hiring Friends and Other Entrepreneurial Errors

My dear friend Ted who is the co-founder of two of my favorites sites ever, Dogster and Catster pointed the way to this article which enumerates the mistakes made as an entrepreneur.

The particular mistake that stuck out to most to me was #2 “I Hired My Friends”.

Per the LendingClub.com:

Do not hire your friends. Especially in a start-up situation, you do not want to be your friend’s employer. Having to lay off a friend of mine was one of the worst experiences I’ve had as an entrepreneur.

Also, you should almost never be the “boss” from 9-5 and “friend” again outside of work. It’s too hard and really an inappropriate burden to put on yourself and your friend (no matter how many times they beg you to hire them!) I wouldn’t even recommend going into business with a friend.

I don’t disagree with the hiring of friends, but rather advise that if one is going to hire friends, one must tread very carefully. There is no reason whatsoever not to treat that friend as an employee and require the same documentation and conduct as is required by other employees.

The opposite is also true, one needs to prepare for a time when friends aren’t the only employees. I remember having a conversation with a client who told me that he didn’t feel that an application, a non-compete or a confidentiality document was necessary to his business because he only hired people he knew personally.

My response was twofold. First, I said that although he is currently only hiring people he knows, there would probably be a day when he would have to hire a complete stranger and aside from interviews (and hopefully background checks) these documents would be the only way he could be assured that his employees would act appropriately and in the in the interest of his business. Secondly, I mentioned Craig of Craigslist and what happened when he hired a friend. That definitely got him thinking. By the end of the day he asked me to put the documents together for him.

Hiring friends, particularly when a company is first starting up, can be very beneficial to the company. It can lend itself to better office morale, common goals for the company’s success and a heckuva holiday party. As long as expectations are clear from the beginning, working with friends can make for a very successful business.

I know I’ve seen it happen more than once around here.