Here’s some good news: small businesses are adding more employees.  One hiring index tracking small business trends reported a 21-point increase over June numbers for the month of July, indicating that the size of the small business workforce is actually growing, despite some other grim economic predictions. That small businesses are hiring isn’t all great, though: hiring a new employee can be a process fraught with tough legal and ethical considerations- background checks, online research, and employment law compliance can all be difficult issues to deal with.  Here are a few sticky topics that can come up when faced with a hiring decision- and how to deal with them.

Background Checks and Pre-Employment Screenings
The Federal Fair Credit Reporting Act (FCRA) requires a prospective employer to gain an applicant’s consent initiating a “consumer report” on an individual.  A consumer report can encompass traditional background check information and much more:  the FRCA defines a report as “…any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living….” If you plan to use an outsourced employment screening company or perform a criminal background check, you definitely need the applicant’s consent first.

Social Media Searches
Referencing Facebook, MySpace, and yes, LinkedIn profiles could also be considered a background search for which you need the prospective employee’s consent.  Social media searches are a potential legal minefield because they can call information to your attention that isn’t relevant to the job or is otherwise impermissible to consider- a social media search can reveal a person’s age, religious affiliation, or marital status- none of which can be considered a factor in a hiring decision.  Of course, this doesn’t mean that a prospective employee’s online proclivities are completely off-limits.  If you must search, ask an employee who’s not making the hiring decision to do it, or better yet, notify the prospect that you may browse their profile.  Since no clear legal precedent exists so far on the legality of making decisions based on such searches, it’s better to be safe than sorry.

Work Eligibility Regulations
Some industries have specific hiring requirements- for example, long-haul truckers need a specific drivers license, and medical professionals need certain accreditations.  Some industries also require business owners to perform a criminal background check or verify eligibility to work in the US.  It’s important to make sure you have adequate time to perform these procedures when you’re scheduling interviews with prospects.  Make sure you use a reputable source, such as eVerify, to check information (they have a phone system in place that allows you to verify information easily).

Hiring Discrimination Laws
Worse than hiring the wrong applicant can be not hiring someone for the wrong reason.  Among other regulations, the ADA prohibits employers from using medical history or present conditions to disqualify a recruit (technically, you’re not allowed access to medical information at all, unless it relates specifically to the position), the Federal Bankruptcy act offers discrimination protection for applicants who have declared bankruptcy, and other federal and state laws prohibit discrimination based on other factors.  The EEOC website presents an outline of federal regulations, and state labor laws can be researched individually.

Hiring can be a tough process even without all of the regulatory and legal issues to deal with.  Keeping up to date on the procedures that govern your industry can take time, but it’s worth it- whether you hire an employee screening company to perform background checks or verify employee references yourself, take the time to research your responsibilities.  It is possible to protect an applicant’s right to privacy while still getting the information you need to make a fair hiring decision.

Quick question: When you hear the phrase “Board of Directors” do you think of Fortune 500, Mega-Sized, enormous conference table companies?

Show of hands?

It sounds impressive to have a Board supporting you. To provide direction, guidance and support to you and your business. But that’s just for the big guys, right?

What if you - small business entrepreneur - could have your own Board of Directors, AND stay the size you are?  Receive all the support and benefits the big guys do without the “bigness” of the big guys?

Enter the “Virtual” Board of Directors.

Any business can have a Board of Directors - a set of respected professionals who serve in an advisory capacity for your business. Yep, even you.

Why should you have a Board of Directors?

1. Reality Checks - Board members can bring your feet back to the ground wen you are flailing, unfocused or scattered (it happens to the best of us). They’ll keep you on track so you don’t lose traction.
2. New Insights - When Board members from different backgrounds, have different experiences.  They’ve seen different successes and failures, and have different ideas you can use in your business.
3. Provides Stability - Financial folks like when small businesses have support from seasoned professionals. It gives them confidence knowing you’re not out there on your own.

You may be wondering “why would somebody do that for me? Who am I to ask that of another professional?”

First things first….who are you not to ask that of another professional? You’re no less important than any other entrepreneur.

So, why would they agree to be on your Board?

1. Networking - being on a Board allows fellow members networking opportunities with other professionals. Make your Board appealing to other members so they’ll want to join you, and they will also benefit from the experience.
2. Leadership Experience - Professionals are continutally seeking leadership opportunities. Boards are great ways to do that.
3. Honor - What an honor to be asked to be on a Board, particularly by a business owner who is taking the initiative to take their business to the next level!

What types of industries should the professionals on your board represent? The usual suspects are industries like finance, law and human resources. Don’t forget about asking other successful entrepreneurs who have navigated the waters and make it (in non competing industries, of course). They have great insights on how to make it through the tough times, how to grow, and how to make the most of the high times.

How can a Board serve your business?

As the seasons change and kids go back to school, entrepreneurs begin thinking about their business again. Wrapping up one year, leading into the next, business owners start thinking of budgets, new contracts and do many other things.

How do you plan your business? What do you focus your attention on?  Here are three areas to examine:

1. Finances - Who manages the financial part of your business?  You may have a full time bookkeeper or accountant on staff, or handle your own finances through a user-friendly software program with help from outside expert.  Do you have all the information you need? Do you know the largest expense incurred by your business (other than payroll and rent)? How is your business benefiting from that product or service, and how can you better manage that expense? Pennies make dollars - where can you cut the fat and maintain (or increase) the quality of the product or service you receive?
2. Human Resources - How is your company staffed? How do you track the human capital in your business? For most businesses, payroll is the highest expense. Are your team members being as efficiently as possible?  How can their time be used better - either via more efficient systems or through using their talents better by putting them in new roles?
3. Clients - How do you handle your clients? Are they receiving all the services they need to ensure they are getting a good value from your business? Are you giving efforts to services that aren’t benefiting their business or are simply time wasters they don’t care about? Talk to your clients about how you can better serve them - you may be surprised at what they tell you.