1. Grow up with your business. Start the hiring process by analyzing the level of help you need, the changes you must make to allow that for candidates. Set expectations for performance and make sure you're prepared to offer ongoing and positive feedback.

2. Expand cautiously. Don't rush to hire when sales turn strong and cash is flush. All businesses fluctuate. The cost of adding an employee takes a sharp bite, including compensation, training time, bigger offices and better technology. There are also employee tax and accounting costs. Presumably, such costs are outweighed by greater productivity, but you need to carefully balance the ledger. "Probably the biggest mistake I made in my early hires was hiring too early," says Louis Gudema, president of Magic Hour Communications, a marketing agency in Watertown, Mass. "As a result, they were not sufficiently billable and we were not as profitable as we might have been if I had been slower to hire."While every business has its own rhythm, it's usually wise to go through the first year without hiring. Get a feel for the sales cycle and the downturns. Measure the "just right" temperature of income and outgo. Experts suggest squirreling away at least a year's worth of expenses and overhead before hiring in order to see you through any rough patches.

3. Hire attitude, not skills. You'll be working hard and spending lots of stressful time with your employee. Choose a simpatico go-getter rather than a collection of skills. Usually, if an applicant is smart, eager and open-minded, skills and training will come easily, especially in a multi-tasking small business. Barbara Corcoran founded her well-known New York City residential real-estate firm, The Corcoran Group, in 1973 with only $1,000. She now manages more than a thousand employees in a company that racks up a mind-boggling $5 billion a year. Her formula for hiring?"Find an expander and a container and put them together. Hire opposites and lock them at the hip." That pairing works because they complement each other and they don't threaten the other's territory, says Corcoran, who recently published a business handbook-cum-memoir called If You Don't Have Big Breasts, Put Ribbons on Your Pigtails."There's mutual respect for each other because they realize they can't do what the other does. It's a mistake to put a container in the lead without an expander and it's a mistake to put an expander in the lead without a container."

4. Plan for fair-market pay. Business owners tend to work harder and longer than anyone else — and for less money. That's the price of investing in your own destiny. Plus, of course, entrepreneurs believe in payoffs down the line. But you can't expect every staffer to act like an owner; nor, in fact, do you want that. "The trap is planning based on your own skills, motivation levels and time commitments," says Greg Payne at Uppercase Development, a Web solutions company in Lincoln, Neb. "Unless you are careful, a good hire will cost much more than you expect and produce much less."

5. Test the waters. Before making a full-time offer, let the applicant work for a while so you can see how he or she pans out. Likely as not, this will be learning period for you, too. You'll figure out what you like or don't like about managing and what qualities you want in an employee. There are several trial options. You can find an intern at a local college. Then, if it works out, hire him or her at graduation or for summers and part-time work. Hire an independent contractor or consultant to work on a project or for a few days a week. You can ease someone into the business as a part-time worker. Or, go ahead and hire a fulltime applicant, but set up a probationary period. Usually, state law dictates how long such trials may last so check your state employment office. Typically, it's 90 days.