Small businesses should begin taking social networking more seriously, says a new study by Business.com.

The 2009 Business Social Media Benchmarking Study shows how and where businesses and business people are using social media.

Some employers ban the use of social networking sites such as Facebook, Twitter and LinkedIn, believing that they are simply time wasters. But the study points out that these sites can be a terrific resource for marketing, lead generation and increasing web site traffic. The study also touches on how businesses can use the video-sharing site YouTube and search engine optimization to their advantage.

In his blog on ContentMarketingToday.com,Newt Barrett gives six compelling reasons why you should jump on the social networking bandwagon now. He says that old-school marketing techniques don’t work as well anymore as more customers make buying decisions online. Online marketing, like creating a blog or Twitter feed, costs little or no money. And since many small businesses haven’t adopted social media, you can get a jump on the competition.

Using Facebook, Twitter, Flickr and YouTube to get the word out, the Pennsylvania-based nonprofit Living Beyond Breast Cancer nearly tripled the number of groups participating in its annual Yoga Unites event and doubled the amount of money raised at last year’s event.

The organization is one of many nonprofits turning to social networking sites to reach more donors and volunteers. A recent survey found that 86 percent of nonprofits are on at least one social networking site, and the majority of them have joined in the past two years.

The groups are taking a page from the Obama campaign’s playbook.  The Barack Obama team took advantage of online outreach to reach more voters and raise significant sums of money through small donations.

Some call it “friend-raising,” but social networking, in many ways, is the 21st century answer to good old-fashioned word-of-mouth fundraising.

“It’s the fastest way to get to people,” Bill Cowen, director of the public relations program at Villanova University, told the Philadephia Inquirer “In a downturned economy, it’s one of the most cost-effective means of promotion.”

Just when it seems like the bad news couldn’t get much worse, tales of economic success amid financial chaos are thankfully bubbling up.

And it’s in the form of successful entrepreneurship, everything from shoestring-budget start-ups to major viral marketing coups by tiny companies.

Recession be damned, some entrepreneurs are not only doing well, they are doing exceptionally well, wrote Jill Priluck of MSNBC’s “The Big Money” on March 17.

“With less overhead, a slim-to-none bureaucracy, and a philosophy that goes against even the most innovative Fortune 500 game plan, little guys in industries such as finance, marketing, entertainment, and media are busy, some more than ever, and a few are moving into territory where the big fish can’t swim. Whether making deals, planning ad campaigns, or signing talent, all small fish have the same slogan: lighter, cheaper, faster,” she wrote. “Welcome to the Little-Guy Economy, where boutique investment banks make deals while big finance is frozen, where Web geeks field calls from big media and corporate clients who need viral video and other digital-branding tools, where small law firms prosper and laid-off lawyers open their own shops, where independent music labels innovate faster, and where the word “team” can have a whole new meaning.”

Finance is perhaps the most interesting example, where small firms are playing a strong hand, particularly in the credit markets, where huge loans are history.

“While firms like Goldman Sachs and JPMorgan Chase depend on freely flowing credit markets, boutique firms, which do smaller deals, rely more on private equity sponsors—and don’t have the same bank, credit, or securitization obligations,” Priluck wrote.

If small is in, then it doesn’t take long for some bigger fish to swim over and take a look.

New York City Mayor Michael Bloomberg — as big a billionaire as there is — is now looking to spearhead small business and entrepreneurship in the financial services sector, Priluck wrote.

Video producers Lindsey Johnson and Leo Borovskiy of Lush Life Productions know how it is to make it big when your administrative assistant is your voice mailbox.

They turned a viral marketing jackpot and YouTube sensation “The Chad” into a thriving business that today includes clients like Hearst Digital, Priluck wrote.

“We’ve gone from only working for advertising agencies and marketing companies to having corporations directly approach us with their brands and ask, ‘What can you do and how much can you do it for?” Johnson told Priluck.