What do you do with an inferior employee? 

Assume the inferior employees are not stealing, they just lack the talent, the ambition, or they're just plain lazy and incompetent. Many say that this is an easy decision and that you just get rid of the inferior employee. I get it.

These are all legitimate comments, but what happens if the market is really thin?

What happens when the loss of the inferior employee results at a loss of business for an unknown period of time?

What happens if the training costs to train the new employee who is being plucked from a thinly populated and talented market is expensive? 

In the specific situations I was personally involved in as the business owner, I kept the inferior employees and as a result, I believe I paid a higher price versus biting the bullet, letting go of the inferior employees and paying whatever price I had to pay, including lost business. 

What I found was that the inferior employees bring down other employees who are more talented, more ambitious, and more willing to work. The inferior employees are the proverbial bad apples that spoil the whole bunch, and as a result, everyone goes down with them making the whole operation that much more inefficient, ineffective, and unfair to the most important people in the process: the customer.

Believe me, I understand how tough the decision is to cut the cord. You know that you're going to spend a lot more sleepless nights while you lose business and do not have replacements. You will personally have to work more hours and this can be very taxing, especially when you're already working crazy hours. It tears the very fiber of the business owner, but it is one of those unfortunate situations business owners encounter. 

The key is to take every precaution you can to prevent this during the hiring process and during the employee's first 90 days of the job, often called the probation period, see if they're going to work out or not. I look at finding employees in a tough market, like looking for new business. You have to be aggressive in advertising for people. There's just simply no other way. You're competing with your competitors for people, and some of them are giving signing bonuses (yes it gets that crazy). At the very least, you must advertise in as many channels as possible.