Last week I moderated a panel event hosted by the Coleman Entrepreneurship Center and the Illinois Technology Association, and am here to confirm what a lot of people have been saying now for months:  entrepreneurs will lead the country out of this recession.

While the macroeconomic picture in the United States isn’t exactly where we’d all like it to be, small start-ups and early stage firms are thriving.  Yes, you heard me.  Thriving.  In talking with over 20 business-owners in the past two days, fully 80%  of them are experiencing 15% or better growth rates.  That means new jobs.

By far, the biggest challenge facing these small, high-growth firms is talent selection.  At this critical stage in their life, choosing the wrong person for that first or second hire can be potentially devastating.  Cash is tight to non-existent, and there’s enough work for ten people.  Employee selection is a name of the game, and it was clear from our discussion that most small business owners are, well,  winging it.

We were fortunate to have an outstanding panel:  Mark Hattas, founder and CEO of Geneca, Kevin Turner, a Principal with Model Metrics, and Erich Dierdorff, Assistant Professor of Management at DePaul University.  Here’s a list of great insights given by our panelists at the ITA/Coleman Center panel:

• Hire doers.  The world is full of talkers.  Hire people who are willing to do stuff.  When hiring salespeople, that means hiring people who aren’t afraid of the telephone.
• Use equity sparingly.  Several members of the audience asked, “should I pay staff with equity?”  The overwhelming response from our panel:  No.  The reason cited was that equity is a cheap currency when you’re getting started, but it becomes incredibly expensive once you’re successful and want to buy it back from staff.  The suggestions was to use  a “profits interest” model or phantom stock plan as alternatives.
• Have a vision.  In the early days, all you really have to sell is your dream.  If you lack a defined vision for where you want to take your company, you’re going to have a heckuva time recruiting people to work for you.
• Fire fast.  Once again, experienced entrepreneurs reinforce what you’ve heard from me 1000 times:  as soon as you know someone is a bad fit, begin the exit process.  Delaying the inevitable will cost you.
• Some people work for the satisfaction of doing the impossible.  This panel was full of stories about early employees who made all the difference.  And guess what?  They joined at below-market salaries with little more than faith in the vision to reassure them that they’d made the right decision.  Find those people for your company.
• Attorneys are worth it.  Get your labor documents (offers, employee handbooks, stock plans) drafted by an experienced professional.  It’s not worth the risk to cut corners, because labor laws can kill your company.
• Avoid office space until the last possible second.  It was unanimous:  office rent takes up valuable cash that can be deployed elsewhere in the early days.  With the remote communication tools available out there, there’s little reason to sign a lease.

Great coaching from several successful business minds.