Young Millionaires on . . . Hiring The only thing more frightening than starting your own business may be hiring your first employee. Read on for tips to help you hire right.

You're only as good as the people you have working for you, so we asked our 2004 young millionairesto share their experiences and advice on hiring their first employees. Here's what they had to say:

Christina Bartolucci and Laura DeLuisa, owners of Duwop, a manufacuturer of specialty makeup and body creams
DeLuisa: This is probably one of the hardest things for us, because with hiring people comes firing people, unfortunately.

Bartolucci: Sometimes someone who's amazing on a smaller scale, when it starts to go bigger might not be able to adapt. That's a tough position to be in, when you have someone who's shown you loyalty and that you really care about.

DeLuisa: People have to think, can this person grow with me? Or do I want to stay at a $500,000 or $1 million company, or do I want to grow it further? But it just makes it really hard if you don't think about the future and where this person fits in with you.

Marco and Sandra Johnson, founders of Antelope Valley Medical College, an accredited medical college that provides EMT, medical assistant, paramedic and other training
Marco: Research, research, research. Call all their references; if they don't give you any references, ask for references. And make sure you call those references, verify employment. And then whatever you're going to have that person doing, have them do that during their interview: If you're going to have them doing phone solicitation or answering the telephones, whatever it may be, sit them down and say, "Here are the phones. Here's how the system works. Show me what you can do."

And another thing my wife [says] is make sure they have a passion for what they're doing. We want people at our institutions and our schools to care about the students. We don't want someone here who just cares about getting paid every other Friday.

Stewart Levy, 37, founder of Tokyopop Inc., a multimedia publishing company specializing in English-language "manga"-Japanese comic books
Make sure you have all your legal [concerns] set up right. It's very complicated in California. You need the advice of the right labor attorney. We've always used ADP; that's a really great service. Make sure you use all the outsourcing services necessary from an infrastructure point of view to be able to pay your employees and make sure you've dotted your i's and crossed your t's.

Edward Foy, 33, and Jennifer Foy, 32, founders of eFashion Solutions Inc., an operations management provider for fashion manufacturers' e-commerce sites
Edward: Our first 10 hires were [as hard as] brain surgery. Forget about contacts and salary; just focus on their value and what they bring to the company. We look at each employee from a value point. In the interview, we say: "You're an investment. And like any investment, we want a return on the investment. What will you return to this company on the investment we're going to put into you?"

Jon Cohen, 36, and Rob Stone, 36, founders of Cornerstone Promotion, a lifestyle marketing company, and The Fadermagazine
Cohen: Make sure that employee is really passionate and understands what it is that you're setting out to do. Our number-one strength of this company is our staff.

Stone: There are really two things for me: heart and loyalty. And if you're going to have loyalty, you have to be prepared when you hire your first employee to be able to take care of that person and reward them for any success they bring to the company. I think that gets overlooked. New business owners sort of speed through that step and don't really try to see down that line of how they can grow and make sure that there is growth for their employees. At Cornerstone, we've been able to provide for the people that have really done well here.

Craig Allen, 35, founder of All Star Wine & Spirits, an upscale wine and spirits shop
Know that that employee will not be there that long. One of the biggest things that you've got to understand is it's business and isn't personal. One of the toughest things is when you're friends with employees and you have to let them go. I went through a lot of employees before I was able to get a real nice sense of a team.

I'm point blank: When it comes to employees, don't get too involved with friendship. I like everyone hanging out together, but there are not the husband-wife, boyfriend-girlfriend teams working here. That creates problems. Any time two people work together nonstop, it's not good.

Friendship and family-it's very tough in business. But if you do, you've got to be upfront. It's not personal. I do a lot of stuff with the staff, but they know while they're here, they're going to get barked at if need be.

Josh Linkner, 34, founder of ePrize, an interactive promotion agency
The first employee of ePrize was someone right out of college. I knew him personally; he had no experience in what we're doing here at all. But I look for character over credentials. Here is someone I knew I could trust and who would be very hard working. You can teach skills, but you can't teach character.

Payam Zamani, 33, Behnam Behrouzi, 23, and John Truchard, 32, founders of Reply.com, an online referral service for automobiles, real estate, home improvement and financing
Zamani: The first employee we brought on board was an IT guy. It wasn't as difficult as it was during AutoWeb, which was my first venture. The first few people play a major role in the ultimate culture you're going to have. The most difficult position for me to hire is my HR person. That person has more impact on the culture of the company than anybody else. I have to make sure that that person is absolutely the right one for the job.

Christopher Faulkner, 27, founder of C I Host, a web-hosting and data enter infrastructure provider
My first employee was part time. She was my aunt. The experience was good, but I broke my cardinal rule of business, which is never hire your family. It was hard for my aunt to understand that I was her boss and she was my employee. It was a battle. We parted ways and it was for the best for both of us.