My $0.02, YMWV
Sometimes when you say things, you need to word them in a way that conveys the correct information to them, even if the same phrase when spoken to you would mean something different. I believe this might be one of those cases.
Your friend needs a job, and sees you as having a company. He needs to be told, perhaps quite bluntly, that you don't have a company. You have something which may eventually pay off, but at the moment, it's a stuggle to make ends meet even just for you alone.
Putting someone on won't increase your revenue, so you can't pay him. Taking time away from what you're doing will decrease your revenue, so you can't mentor him.
In short, he needs to be told that you don't have a company, and in some senses you don't have a job. You have an activity that you spend all your time on, with none to spare, and you don't make enough money yet for yourself.
All the above may not quite be true, but you need to get that message across in terms he will understand. You may want to say something like "As a friend I'm sure you'll try to see things from my point of view" but that message might not be heard.