Some small business people (at least in the early parts of their careers) dedice that it would be a great idea to hire some of their friends to help them do business. After all, they have a lot of fun with their friends most of the time, so it should be an absolute blast to have them in the office every day, making enjoyable tasks like closing sales all the more fun, and making even boring tasks seem a whole lot more fun. Unfortunately, this idea is flawed on several different levels, whether the person who is in charge of hiring really realizes it or not.
Generally, hiring your friends to work with you does not work very well, for the simple fact that you tend not to focus as effectively on making your business everything that it can be if you have other people that you actually care about working under you. To be successful in business, and grow it well, sometimes you have to make decisions which are not as kind to the people who work for you as they are brutally necessary to make your business all that it can be. There is a reason why some people theorize that you have to be a sociopath to be on top- it is not a warm and fuzzy place when it comes down to actually making the big decisions.
Of course, there are some businesses in which your friends can be a part of things, and still do well. But when you get right down to it, how competent are your friends? Are they the kind of people whom you would trust to have your back if the world went upside down, and every day was a new kind of fight for survival? If that is a yes, keep in mind you still might have to be cruel to them at some point.