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, getby with a little help from your friends. After all, who better tohire than the people you already know, love and trust? It certainlyworked for Duff Goldman, the 31-year-old founder of Charm CityCakes, a specialty, high-end cake-making business in Baltimore.This seasoned chef, who began his business in 2000, needed helpwhen he started marketing his lavish wedding and event cakes fulltime in 2002. "A friend called and said, 'Hey, you needhelp, and [our mutual friend] Jeff needs a job. You should hirehim,'" recalls Goldman. Though that friend didn't havea cake-decorating background, he had the artistic ability to buildarchitectural models. That skill and his willingness to learn madeit easy for Goldman to train him.

You have to make sure your friend or friends are a good fit foryour company before you hire them, notes Richard Hadden,employee-relations expert and co-author of Contented Cows Give Better Milk. "Thatapplies whether the person is a friend, enemy or someone you haveno [prior] knowledge of," he says. "But the fact that heor she is a friend should not be a qualification [byitself]."

Hiring a friend is like hiring any employee in a lot ofrespects, though the main difference is that you need to discussall possible contingencies before you hire him or her, anddetermine exit strategies in case it doesn't work out. Anddon't oversell what the job is to your friend. Be realisticabout the pay, responsibilities and other aspects, notes WolfRinke, author of Don't Oil the Squeaky Wheel: And 19 OtherContrarian 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 alwaystreat your friend just as you would any other employee, regardingboth positive actions like raises and difficult disciplinaryactions.