Small businesses are losing out to their bigger rivals owing to poor use of technology, new research has found.

Separate surveys of small business employees and employers found that both groups recognise the importance of IT as a vital part of their business.

But barely half have a firm plan in place to develop IT systems to better meet the demands of customers.

"Customer service excellence and adaptability differentiate companies in competitive markets," said Bill Murphy, managing director of BT Business, which sponsored the research.

Meanwhile, customers are getting more choosy. Some 72 per cent of small firms said that customers are more demanding than two years ago.

And 41 per cent of customers had decided against purchasing a product or service from a small business because it was 'not responsive enough'.

Over half of small business employees believe that their company does not respond to customers quickly enough because they are swamped by day-to-day operations.

Nearly 80 per cent of those questioned used mobile phones, two thirds were using laptops and over half had remote access systems in place. Only four per cent used none of these.