Social networking sites like Facebook, MySpace and Twitter connect millions of like-minded people every day through the Web. But did you know they also can help your small business connect with customers?

"Social networking can help promote a small business in two ways," says Susan Barnes, a professor and associate director at Rochester Institute of Technology's Lab for Social Computing. "Loyal customers can create small networks and provide testimonials for the business and employees can share information with each other through social networks."

More than half of all small-business owners believe social networking sites have a place in the business world, according to a 2008 survey by SurePayroll. And one in five companies has generated business from a social media site.

What's the appeal of social networking? There are practically no barriers to entry, for starters.

"Facebook does not charge a fee, nor does MySpace or LinkedIn," says Shaun Clancy, owner of Foley's NY Pub & Restaurant, a small business located across from the Empire State Building in New York that has tapped social networks to increase its business. For example, it uses its Facebook account to promote special events, such as a Frank Sinatra-themed evening. "If someone is going to offer marketing opportunities at no cost, why not accept the offer?"

(In fact, none of the social networking sites charge to join, although some, like LinkedIn, have premium levels that are not free.)

Another reason: it's where customers are. Nearly 7 in 10 of American adults visit online blogs, communities or social networks, and one-third of those surveyed say they visit these sites to read up on product reviews to help them make purchasing decisions, according to a 2008 MarketTools report.

The promise of this emerging technology is simple. As web strategist Lorrie Thomas puts it, "Small businesses can dominate if they embrace social networking as part of their marketing strategy."

But how? Here are seven tips:

1. Choose your social network carefully. There are dozens of popular sites where a small business can set up shop. Pick yours with care. "LinkedIn is the gold standard for business," says Joe Procopio, president of Intrepid Media, a management and technical consulting company based in Chapel Hill, NC. His company uses it for hiring, sales insight, and monitoring changes in the business landscape. Another good bet for a small business is Facebook, which lets "friends" within your network know what you're working on and what you're interested in. "Facebook is a personal PR machine, and its hooks between networks allow you to reach people you'd never be able to reach on your own," adds Procopio.

2. Set realistic goals. Any small business that tries to participate in every social network will quickly become overwhelmed. Experts say a little planning is important. "It's all about quality, not quantity," says Mary Ellen Tribby, co-author of the book "Changing the Channel: 12 Easy Ways to Make Millions for Your Business." She says having a clear objective is a key to success in social networking. "Why are you using a social network?" she asks. "To create buzz? To build a list? To sell a product? To build relationships? Or for feedback?" Depending on how you answer, you can set your sights on building the right relationships with the right people on the right social networks.

3. Find your audience. Social networking is all about segmentation. So once you've decided where your customers are, chances are you'll have to dig deeper to contact them. Do they hang out in a chat room or do they belong to a particular group? Kel Kelly of the Boston Web marketing consultancy Kel & Partners, says the search may lead you to other social networks that are out of the mainstream. "As an example, if you are selling to moms, you should leverage sites like TheWiseMommy.com," she says. "If you are trying to reach a well-educated, older demographic, sites like Gather.com would be a great choice. And if you are trying to reach an affluent consumer, a site like Spire.com would serve you well."

4. Be a good netizen. Joining a social network may cost nothing, but there are rules that have to be followed and a price to be paid if you don't. A social network isn't another venue from which to broadcast your press releases or new product announcements nonstop. Social networking guru Shel Horowitz says the customers you'll meet online expect you to actually be a part of the network. "Be helpful," he suggests. "Share information and resources, especially those that demonstrate your expertise." He also recommends posting to a network regularly - at least a few times a week.

5. Open up . . . Part of what makes social networking an effective tool is that you can easily meet new people. Keeping an open mind is important. "When you join any social network, you need to be an open networker," says Jorge Olson a San Diego-based social networking expert and author of the book "The Unselfish Guide to Self Promotion." So what's an open networker? It's someone who accepts invitations to "connect" or become "friends" with anyone. "This sounds very simple, but it is not," he adds. "Many people are still afraid of networking, posting their photo or giving their e-mail address online. This defeats the purpose of networking." Another bonus: Being an open networker is a tip-off to other experienced networkers that you're in the know. Result? Better leads.

6. But not too much. Assume that any information you post on a public networking site will be read by everyone you know. Even if you think they're private (for example, if you "protect" your updates on Twitter, the microblogging site). "Even if you create a profile as an individual on a non-business oriented network like Facebook, keep in mind that colleges and potential customers may come across the information you post there," says John Enright, a vice president for LimeLabs, a Web application development company. Think twice before posting details such as your political affiliation, personal beliefs and jokes. "They may seem completely appropriate among friends," adds Enright. "But they could be interpreted as offensive or unprofessional."

7. Listen more than you talk. It's a natural tendency to log on to a social network and start spreading the word about your product and service right away. But you might consider doing more listening, at least in the beginning. "Small business owners should seek out blogs, key industry leaders and forums in their market to become aware of the social media environment for their industry," says Clate Mask, the chief executive of Infusionsoft, a Web application developer in Gilbert, Ariz. When is it OK to get chatty about your company? If you participate in the social network, it will become apparent when you can begin talking. Often, another member of the network will ask you a question about your product. That's a sign.
With a little planning and research, and by learning the rules of the game, you can boost your business with the help of a social network. Remember: Social media isn't like anything else. "It's about having a conversation with your market," says Alec Saunders, the chief executive of the Ottawa, Canada-based social networking company Iotum. "By engaging customers one-on-one, you lead to conversations, which lead to word-of-mouth. And word-of-mouth is what you want."