Small business owners have a love-hate relationship with the internet, despite the massive opportunities it can offer, new research has suggested.
Although almost all SMEs have embrace the internet for business reasons, huge numbers still have reservations about the overall effect the internet has had on their businesses.
But SME groups said businesses had to make the most of the technological opportunities presented, with one Midlands firm saying new mobile internet technology could save companies the equivalent of an extra day a week.
The research, carried out by Cranfield University, identified several major problems SME owners had about the internet, including:
* The increase in the complexity of running a business n The internet making it harder to protect confidential information
* A lack of belief in the ability of the internet to increase efficiency
* The increased amount of foreign competition over the internet
Professor Andrew Burke, a leading SME academic and co-author of the research, said: "There is no question that the internet has enhanced the performance of SMEs by enabling them to be more innovative, more up to speed, negotiate better with suppliers, make greater use of outsourcing and to operate more flexible working hours.
"The sting in the tail is that the uptake in internet use by SMEs has been so dramatic that most now share these same benefits and so few can garner a competitive advantage as a result.
"It's like a game of golf where a new superior driver becomes available that can hit the ball an extra thirty yards. If everyone uses one then eventually no player has an advantage.
"At the same time no player can afford not to use one or they would be thirty yards behind everyone else after teeing off. It simply becomes necessary in order to compete."
Of Britain's 4.4 million small and medium businesses, at least 97 per cent have access to email, 94 per cent to broadband, and 84 per cent have their own websites.
But nearly two-thirds of SMEs surveyed say they do not feel the internet has increased the efficiency of their business, and 46 per cent said they thought it had actually made things harder for them.
They also feel that broadband suppliers use complicated technological language, that the internet hinders direct contact with customers and other businesses and that the sheer volume of information sources available online is frustrating and time-consuming.
And many cited the additional technical problems of an internet presence as being one of the major frustrations with the web.
But researchers at Cranfield claimed the impact of the internet had actually had a positive effect on the output of the small business market, forcing SME managers to raise their game after making t heir job more challenging.
And they said this happened because the popularity of the internet among both consumers and SMEs had resulted in a more fiercely competitive market as well as more choosy customers.
A spokesman for the Forum for Private Business agreed, saying: "Although the UK's smaller firms appear to be reluctant to embrace the internet, its potential as a business tool which allows them to complete more effectively with bigger companies is encouraging them to spend around £20 billion a year on IT and telecommunications technologies.
"Many are deterred by such steep costs, but the FPB's partnership with telecoms provider Chess, for example, can help them to keep up to speed without breaking the bank. The benefits of marketing your business on social networking sites such as Facebook and MySpace, as well as those devoted purely to business issues - such as the FPB's new online forum - are many.
"Last year, a study carried out jointly by the Institute of Directors and broadband provider UK online found that the UK's small businesses are risking losing business and falling behind their European counterparts because of their failure to grasp the benefits of the internet, such as promoting their businesses to a potentially global audience. Many do not even have a basic website. A good, user-friendly site can prove invaluable as the first contact a potential customer has with a business."
And research by local telecommunications firm Phonebox said the majority of local SMEs could save a lot of time by taking advantage of the internet more cannily, including the use of mobile email devices like BlackBerrys.
They said at least 86 per cent of small and medium businesses in the region could be losing the equivalent of as much as a day a week in work because they cannot access emails away from the office. This means that 20 per cent of directors' time is unproductive, and too much time in the office is wasted just catching up with emails.