While large retailers say online shopping is eating into their profits, almost seven-in-ten (68 per cent) small to medium businesses (SMBs) say they are not concerned about the impact of the Internet.

New research commissioned for the Telstra Business and the Council of Small Business of Australia (COSBOA) shows up to 81percent of SMBs now have a website - a significant increase on previous surveys.

And many say they are planning to increase their online presence in 2012.

Group Managing Director of Telstra Business, Will Irving, said it shows the Internet is regarded as a powerful and positive tool by small business.

"Adding new customers is the top priority for two-thirds of SMBs in 2012 and building a stronger Web presence can do just that," Mr Irving said.

"Social media has emerged as a prime growth area with just over one-in-five SMBs (21 per cent) now using it in their operations."

Top uses were interacting with customers (74 per cent), promotion (64 per cent) and generating sales leads (38 per cent). A surprising 26 per cent of this group say they use social media for direct sales.
"Many small business operators will have to change their mindset to embrace social media," Mr Irving said.
"Six-in-ten business operators or owners are telling us they believe staff should not be able to access social media in the workplace," Mr Irving said.

Mr Irving said online advertising was fast overtaking other forms of marketing for SMBs with 19 per cent using it, although print ads remained a staple for a quarter.

"The phone is still the main way of directly connecting with customers for half of them, although occurring more often via a smartphone that can also access the Web," Mr Irving said.

Other findings:

• Some 74 per cent of SMBs use email to connect with their customers while outbound calling (50 per cent) and websites (37 per cent) were other favoured channels;
• Three-quarters (75 per cent) of SMBs use Internet to source small business information, with professional associations (37 per cent), peers (36 per cent) and newspapers (29 per cent) rated far less important;
• Some 21 per cent of SMBs nominated big business buying more favourable search engine or advertising placement as an issue of concern for them;
• After increasing their Internet presence in 2012, other priorities for 2012 are reducing debt (35 per cent), networking (27 per cent) and investing in new technology (23 percent).