In the last decade the internet has become ubiquitous with business. It is now unheard of for any small company that wants to taken seriously to not have a professional looking website. All indications are that this is the way that social networking is going - that in ten years it will be as common for SMEs to have a presence on social networking sites as well as their own internet site.

Social networking is a way for small companies to raise their profile, directly communicate with clients and potential clients, create natural weblinks back to their site and engage in free marketing.

The most common social networking sites are Facebook, Bebo and Twitter. Social networking is a relatively new phenomenon and can be defined as the grouping of individuals into specific groups, like a community.

According to a recent O2 survey, an estimated 700,000 small businesses are using the social networking site Twitter with 6,000 more joining every day. The poll of 500 small firms found that 17% are already using Twitter, with 25% of these SMEs signing up to the social networking site in the last month.

Nearly a third of those surveyed said they had saved up to £1,000 since signing up and 16% claimed that they had been able to save up to £5,000.

"The increase in small businesses using converged devices such as smartphones combined with the simplicity of Twitter represents a fantastic opportunity to further raise their profiles and increase efficiency," said Simon Devonshire, head of small business marketing at O2.

Mark Stuart, Head of Research at The Chartered Institute of Marketing believes social networking can have great benefits for SMEs.

"Firstly, they are a very cheap, fast and effective way to reach new customers if you use them in the right way. If you're targeting Generation Y; teenagers and young adults, then you need to communicate with them in ways that they want to be communicated with, and that means using channels like Facebook and YouTube to reach them."

"You can also create a presence by setting up a group application for your company, or create a profile page for the business the same way an individual would. People will add you as friends if they like what you do; you then have a free advertising platform."

One way for a company to grow is by having people click on their websites to view their products and services. An essential component of getting clicks on your site is by having links to different sites, and links can be obtained through other sites or by paying search engines for them.

One method to obtain natural links is to link back to your original web site within the social media sites you set up. Many social media sites will allow you to include a information about yourself or your company and in many cases, add a link or links to your sites. The bottom line is that social media profiles create opportunities for natural links.

Small companies can sign up the social networking sites for free and, as long as they update then regularly, can use them to build up their brands profile and regularly connect with customers. It is clear that small companies should at least consider social networking as a cost-effective method to drive their firm forward.