Companies that have jumped on the Twitter and Facebook bandwagon are reporting a  huge surge in customers.

With minimal marketing budgets available to many small businesses, social networking sites offer a quick and, more importantly, free means of promoting their wares to a global audience.

In the face of stiff competition and a global economic downturn, it is a route more and more companies are going down.

Sisters Sophie LaMontagne and Katherine Kallinis have been using Twitter and Facebook as a marketing tool since they launched Georgetown Cupcake in Washington DC in 2008.

Together they work like a virtual focus group, a bulletin board, a marketing campaign and branding exercise rolled into one," said LaMontagne.

As well as posting details of new flavours, specials and events, they are using the social networking sites to promote their new nationwide delivery service together with their new store in Maryland.

Anamitra Baneji manger of cemmerical products at Twitter says "Every day we are seeing businesses using Twitter in more and more creative and exciting ways, we have got lots of restaurant owners and bar owners right through to plumbers and building managers."

Facebook, which has 300 million users worldwide and recently announced it had become cash-flow positive, offers businesses special pages and the option to buy ads to show to users who like similar companies.

As well as using social media sites to communicate with customers, small businesses are using them to connect with potential suppliers, stockists and other people they can trade skills with, such as accountants, marketing experts and technology workers. One recent Twitter post from a graphic designer asked other business users for advice on computer software his company was thinking of buying!

But experts warn that social networking sites are not without dangers.

They say "You are losing control of your message by inviting customers into a dialogue and that could be problematic if they criticise you," 

Users are advised  to think of it as a conversation rather than an advertising space. There is a fine line between giving people a steady stream of useful information and bombarding them. If you do the latter you are in danger of turning customers off.

The key is to keep your messages concise, free of fluff or marketing jargon and only convey genuinely useful information.

Let us have your thoughts on using Facebook and Twitter ... are you a tweeter?