Hashtags are a key to riding today’s social media wave. But understanding what a hashtag is, let alone implementing one, can be confusing for many small business owners -- even ones that consider themselves tech savvy.

“Hashtags open up the social media world to better converse with your company,” says Barry Sloane, CEO of Newtek, a health insurance agency for small businesses. “A website or URL post only brings you to the company’s website, while a hashtag allows people to use it in everyday conversations they have on social media.”

Similar to putting phrases in a search engine like Google, hashtags enable people to search and discover content on social media Websites including Facebook and Twitter.

With a hashtag, users can tag posts, pictures and videos with a hash symbol (#) followed by a word or phrase. This allows the social media site to categorize posts based on like terms, which in turn makes it easier for people to search for similar and related posts.

For small businesses, especially ones that don’t have a big marketing budget, hashtags are a free way to build a follower base on Facebook and Twitter, granted they are posting interesting content and using the appropriate hashtag keywords. 

“On social media this is the most cost effective way to get your brand out there,” says Gurbaksh Chahal founder, chairman & CEO of RadiumOne, a digital advertising company.

Hashtags can also be a great way for small businesses to connect with people that care about their product category or business field. For instance, if your company makes hair products and you are able to post relevant content, than a whole swath of people (AKA new customers) interested in hair products can find yours under the hashtag. 

“Repeated tweets to those hashtags will hopefully gain the emerging enterprise more notoriety and a regular following that could never be achieved cost effectively in any other known manner,” says Sloane.

For small businesses that have a marketing budget, hashtags can also be a great way to run a promotion and at the same time get the word out about the business. According to a RadiumOne survey, 51% of respondents said they would be more open to sharing company hashtags if they got a discount or a chance at a prize for doing it.

“Not only can you give discounts, and therefore bring in more customers, but this allows you to track promotions activity online,” says Sloane.

But just like there are rules governing how a business should act on social media sites, there’s also a protocol to follow when it comes to hashtags.  For instance, Chahal says small businesses have to choose hashtag categories that are broad enough to reach a diverse audience, but at the same time make sure it also reaches that niche user base. He also says small businesses don’t have to stick to just one hashtag, but can use multiple to reach even more potential customers. 

Since any word of phrase can become a hashtag by adding the # symbol in front of it, Sloane says small businesses should use a hashtag in front of their company or brand name and hashtag related keywords or buzzwords. For example, Newtek often uses #smallbiz, he says.

While hashtags are used on Facebook and Instagram, they are primarily found in the Twitter domain. Because of that, experts say small business owners must embrace hashtags in tweets, and consider using them on Facebook and even Instagram as well. 

“I’ve seen a brand thrive based on the conversation,” says Chahal. “The best way to get started at no cost and no investment is just using creativity to get your product out there.”