Many small business owners do not recognize how prevalent social networking use is among their customers. Most Internet users spend time on these sites, and it is an inexpensive way to gain new customers and communicate with them.

Over half of Internet users will use social networks this year, but the best way for companies to interact with them is still an experiment. But with Facebook membership surpassing one half billion active users, the potential is crucial to address. Online reputation management service provider RatePoint released a survey last month shows small businesses are not so sure about how social networking impacts customer reach.

While over one-third of small businesses recognize that their customers are on social network sites, one quarter are undecided and one-fifth disagreed that customers use these sites. But eMarketer numbers verify that most Internet users spend time on social networking sites, and by 2014, this usage level will nearly reach two-thirds.

Not only is the social network adoption rate high, it spans the demographics, making it even more important to access these consumers. Rapid growth is occurring especially in the 35-plus group. “Social media use is no longer limited to one demographic, everyone is adopting,” said RatePoint CEO and co-founder Neal Creighton. “While many small business owners are uncertain, big brands are investing heavily in social media. Social media can be a great equalizer for small businesses to compete alongside larger brands and SMBs are missing out if they are not involved.”

Unfortunately, while the returns can be big, SMBs do not generally know how to utilize social media for businesses. Only 25 percent believe that customers want to hear from them on social networks and 36 percent believe that customers do not, and 35 percent agree that social media is a "quick way to connect with prospective customers," while 28 percent disagree.

This tepid adoption by SMBs means that most do not take advantage of these tools. According to RatePoint, small businesses who use social networking to reach customers find "a strong return." Also the least expensive option, social media gives SMBs a way to "meet customer needs, build relationships and make sales."

By Ivory King