More than half of the public (55 per cent) find it difficult to support local small firms because many of these businesses aren't online.
Figures from the Department of Business, Innovation & Skills show that as many as two million (39 per cent) sole traders and small companies are missing out on business because they have no online presence.
In addition, more than half of customers (52 per cent) go straight to search engines when looking to buy from local businesses, nearly double the number that ask for word-of-mouth recommendations.
With total website sales in the UK worth £164 billion, small businesses and sole traders could be missing out without a digital presence.
In the run-up to Cyber Monday on December 1, which last year saw 115 million visits to retail websites by UK Internet users, the government is helping micro-businesses and sole traders to increase their digital skills.
Measures to help businesses become more digitally active include £2 million of funding to 22 Local Enterprise Partnerships to help small local businesses increase their digital presence.
Projects include the development of a digital TV channel in Manchester which provides easily-accessible and cost-effective advice to businesses, supported by events, advice and networking sessions.
Also, a campaign will be launched to bring small business owners to the new resources and advice on how to do more with their business online at www.greatbusiness.gov.uk/
Business and enterprise Minister Matthew Hancock says, 'Thousands of potential customers are searching online for local small businesses and without an online profile businesses will lose out.
'To make sure consumers get the best deal and small businesses spread their nets far and wide, the government is investing in expert advice to help them do more online. I am committed to making the UK the best place in the world to start up and grow, and this is integral to achieving that.'
Government entrepreneur-in-residence, Simon Devonshire says, 'Government research suggests that nearly two million UK businesses are not online, and of those that do have an online presence; over two thirds are not transactional.
'I cannot think of a business to whom being online is not now vital to their trade, irrespective of their ambition to grow. I think those businesses that embrace the digital opportunity are improving their opportunity to reduce costs; to scale-up; and possibly even export – giving a further boost to the UK economy.'
The government research, based on a sample of 2,191 people, shows that consumers are looking to the internet more than ever to find small local businesses and sole traders.
Some 73 per cent of respondents say it is very important that they are able to find a company online if they are going to give it their custom, with 57 per cent agreeing that if they can’t find any evidence of a business online they are reluctant to give it any business at all.