Over at Yahoo! Finance, they feature an article about hiring family members and friends in the small business.  When I first began reading the article, I almost choked on my lunch at one of the opening comments:  “I’m a big fan of nepotism.”

Fortunately, the article went on to lay out guidelines for the small business owner who is seeking talent and is looking to family and friends as new employees.  It’s a good read if you’re at the crossroads of staffing…..check it out.

Hiring friends you may have worked with in the past or who have an outstanding track record can be a worthwhile experience.  The most important factor is can a line be drawn between business and friendship.  A more difficult situation is drawing the line between business and family.  I have personally been involved with two small-medium sized businesses where the CEO decided to hire immediate family to function in key roles.  These decisions not only divided the company and our executive teams, but also turned out disastrous as no business owner wants to confront, discipline, or fire an immediate family member who is in over their head.  Pay careful attention if you are planning to or have hired a close family member or friend —- treat them just as any other employee in the workplace (trust me, it’s easier said than done).

Finally, if you have ever considered selling your business, think twice before bringing on family members to run key positions.  Odds are that when you sell the business, they will not wish to work for the new owner.  This is a detriment to any potential business buyer and an intangible weakness in your business, negatively impacting purchase price and your ability to close the deal.   Diversify your staff so that when you sell, those key employees remain with the business allowing a new owner to successfully transition.