We live in a digital age where businesses of all sizes have access to a huge range of technology to help them scale up. One of the most readily available and beneficial tools for businesses is social media.

Not only is it a great way to communicate directly with customers, but it’s a free way to build brand recognition and personality.

Despite its benefits, many businesses still don’t have a presence on social media. Sometimes this is a conscious decision, but often businesses overlook it and don’t always understand its strengths.

The vast array of options available can sometimes leave business owners feeling overwhelmed and confused. But in truth, utilising social networks can bring a whole new dimension to your business and is a vital addition to any entrepreneur’s marketing toolbox.

Why is social media beneficial for your business?

1. You can grow and differentiate your brand

Social media allows you to emphasise what areas you specialise in, making it easy for your audience to relate to you. You can easily share industry knowledge with your client base, building a picture of your brand through customer reviews and responses to queries and comments.

1. You can track competition and industry trends

Social media platforms like Instagram and Twitter make it easier than ever for you to monitor your competitors’ activity, from keeping an eye on new product launches to seeing how they deal with customer complaints. It’s a great way to stay a step ahead of other businesses.

1. You can easily receive feedback from customers

Almost all platforms now feature an element of two-way interaction, allowing you to easily speak directly to your customers. This will ensure that you can understand what services your customers need, and it’s also a great way to seek live feedback and new ideas for your brand.

1. You can monitor your reputation

Social media is a reactive space, where it’s easy to see what is being said about your brand. Though some companies may be reluctant to open themselves up to this scrutiny, having the ability to respond to comments or complaints in realtime is extremely useful. When you demonstrate a high level of customer service, it can have a powerful effect on your reputation.

1. You can take your brand global

Small businesses may lack the budget to invest in advertising or marketing, but social media can start to level out the playing field. Use your size to your advantage and really capitalise on a brand image centred around being local, small, agile and responsive - traits that customers will admire.

If you’re already using social media for your business, it can be useful to take a step back and evaluate your efforts. What could you be doing better? Can you set yourself objectives to ensure you’re using it to its full capacity?

For instance, you could set yourself goals using the SMART framework (specific, measurable, achievable, relevant, time-bound), to ensure social media can have a real impact on your business.

It can also help you understand when it is best to post for audience engagement. A good rule of thumb is to use 80% of your content to inform, educate, or entertain your audience, and the other 20% to promote your brand or sell your products.

This way, you aren’t overwhelming your followers with too much branded content.

Donna Torres is director of Small Business at Xero UK

For more tips and tricks for your small business, check out Xero's free small business guides.