How to check references

Don't be afraid to look outside the box when you're trying to choose the right candidate. It's all too easy to be blinded by an impressive résumé filled with superior education and long lists of skills.

"Small businesses sometimes feel they can't afford to not have all the skill sets and will be too rigid," Fletcher said. But a finding a person whose personality fits the culture of the company can be just as important as finding a person with the right background.

Wessel admits to making a serious hiring mistake once because he was blinded by the candidate's gilded résumé.

"I assumed that because she had worked with a well-known, large competitor, that I could just insert her in and she'd be off running," he says. The new employee never fit into the team and eventually stopped showing up for work. "I completely did not see the signals during the interviewing process that she might not be dependable and might have other issues," says Wessel.

"It's not always about hiring the most trained, the best educated person," Wessel adds. "It's about hiring someone who is going to conform and fit with the company's cultures and ideals and values. That's a difficult thing to determine during the hiring phase. I've learned to be more cautious and listen to instincts when it comes to personality and cultural fit."

How to make an offer she can't refuse

So now you think you've found the perfect candidate for your growing small business. But now you have to make sure your candidate is on board. As a small business owner you have some advantages when it comes to negotiating terms of employment.

You may not be able to offer all the bells and whistles in terms of stock options and benefits, but small businesses can often provide other valuable benefits, such as flexibility in work scheduling. Fletcher was able to accommodate one employee who needed time to care for her sick mother living at home. She worked part time at the office and part time at home, something that a big company can't always offer a new employee.

"It's paid back in loyalty," Fletcher says. "That person has been with me for 12 years now."

You can also promote loyalty by signaling that you're hiring the employee because you think they have potential for a leadership position down the road, Hockenberg says. Over the next few years, as baby boomers begin to retire, managerial and executive positions at small businesses will begin to open up for workers who are being hired at entry-level positions today.

"Signaling that a person may have potential for a leadership position later on will help create more loyalty and dedication and will help get a better value for the person," Hockenberg adds.

When negotiating compensation, Wendover said he doesn't like to spend too much time chasing a candidate because it puts them in the drivers seat in terms of negotiations. Instead, he offers what he can, competitively, and waits to see if the person will come on board.

Smart recommends not being shy about telling the candidate how much money she can expect to make in salary, bonus and equity, especially at a new or growing business. But money isn't everything. It's vital to understand that workers take family and many other factors into account when deciding whether or not to join a company.

Smart thought he had found the right guy for a position at ghSMART, his Chicago-based management consulting firm. Smart made him an offer, he signed an agreement, and they started celebrating. "He was getting married the next week so we sent him a bottle of champagne to congratulate him," Smart recalls.

A few weeks later, the new employee backed out of the job on the grounds that his wife didn't want him joining an entrepreneurial company with only 27 employees.

"He basically drank our champagne and then called and said he's not going to come after all," Smart says ruefully. "Shame on me for not asking if his new wife was on board with him making this career move."

Don't be in the category of small business owners and entrepreneurs who make costly hiring mistakes. As Smart says, it's not about the what in business, it's about the who. 

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