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Circle of Friends

Hiring your friends can pay off for your business--if you do it right.

To start your business, you may need to, as the song goes, get by with a little help from your friends. After all, who better to hire than the people you already know, love and trust? It certainly worked for Duff Goldman, the 31-year-old founder of Charm City Cakes, a specialty, high-end cake-making business in Baltimore. This seasoned chef, who began his business in 2000, needed help when he started marketing his lavish wedding and event cakes full time in 2002. "A friend called and said, 'Hey, you need help, and [our mutual friend] Jeff needs a job. You should hire him,'" recalls Goldman. Though that friend didn't have a cake-decorating background, he had the artistic ability to build architectural models. That skill and his willingness to learn made it easy for Goldman to train him.

You have to make sure your friend or friends are a good fit for your company before you hire them, notes Richard Hadden, employee-relations expert and co-author of Contented Cows Give Better Milk. "That applies whether the person is a friend, enemy or someone you have no [prior] knowledge of," he says. "But the fact that he or she is a friend should not be a qualification [by itself]."

Hiring a friend is like hiring any employee in a lot of respects, though the main difference is that you need to discuss all possible contingencies before you hire him or her, and determine exit strategies in case it doesn't work out. And don't oversell what the job is to your friend. Be realistic about the pay, responsibilities and other aspects, notes Wolf Rinke, author of Don't Oil the Squeaky Wheel: And 19 Other Contrarian Ways to Improve Your Leadership Effectiveness. "If you have a trial period, it should be [the same as with] any other employee," says Rinke. It's also key to always treat your friend just as you would any other employee, regarding both positive actions like raises and difficult disciplinary actions.

Hiring friends was definitely right for Goldman, who now employs 10 close friends to help create his unique cakes, shaped like everything from sports cars and baseball diamonds to high-fashion handbags and butterfly havens. With nary a personality clash in sight, he projects 2006 sales to reach $750,000.

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This article was originally published in the July 2006 print edition of Entrepreneur with the headline: Circle of Friends.

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