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Being a small business does not protect you from wrongful termination litigation. Recently a company admitted that they terminated a middle-of-the-road sales person "to send a mesage" to the remaining staff. Their lack of a documented process and proof that they followed that process open them up for possible litigation & when the economy goes down - this type of litigation goes up.
What should you do to further protect your business when/if you have to terminate a staff member?
1. Make sure you took a number of steps/conversations that set expectations & documented the results.
2. Try your best to coach the person to turn things around before they get to this point.
3. Enage other key staff members in the process.
This should all dovetail into your policies & procedures manual, under the catagory of Disiplinary Process. Establishing this process ahead of time will allow you to think objectively vs emotionally if /when a staff member requires this form of attention.