Small businesses lose an average of £5,000 a year in business due to IT and technology failures.

According to research by O2, 49% of small businesses have lost business as a result of being unable to keep in touch with customers and suppliers due to poor internet connections, email and mobile outage or malfunctioning computer hardware.

A further 43% said they lost business because of low productivity from staff who were frustrated by slow of faulty IT systems and 25% said such failures had left them unable to work for as much as four days a year; twice the average number of days per head these small firms had lost to staff illness.

The survey also suggested that many companies are making things worse by attempting to patch up systems themselves in the current climate. Over half (53%) said they would rather do this than call in professional help while 31% said they would turn to a colleague for advice first.

But twice the number of firms that had taken this approach had lost business than those that called in experts, while 33% admitted to spending an additional £2,000 a year replacing broken equipment such as PCs, laptops and mobile phones.

"In the current economic environment it's not surprising to see that small businesses are trying to cut costs; being flexible and quick to respond to changes in the marketplace is what makes small businesses as resilient as they are," says Simon Devonshire, head of SME marketing at O2.

"However, it's important that they work out what they can afford to cut back on and what outgoings will actually end up saving the company money in the long term."

Nearly a quarter (24%) said they now spend nearly half their time out of the office and rely on mobile and wireless networking to stay in touch.

Email and mobile email failures were seen as the biggest impediment to business success in the research, ahead of issues such as staff disputes and government red tape.