I’m often asked about Twitter for small business, and my answer is always the same: if your customers and competitors are on Twitter, you need to be too.

Twitter for small business is more than announcing what you’re eating for lunch or your latest profound insight. Done right, it can be a vital way to communicate and make connections that will help you expand your business. If you’re in an industry related to media or content creation, Twitter is a must.

So how do you get started using Twitter for small business? Signing up for an account is self-explanatory and free. (Upload your logo/headshot and a professional-looking background image.) The real question is how to wring value out of Twitter. Here are 5 ways to get the most out of your time on Twitter.

Follow Competitors and Customers

After you sign up for a Twitter account, the next question is who to follow. These are the people or organizations whose tweets you will see in your timeline. When using Twitter for small business, you’ll want to follow people in four categories:

• Customers. Find your customers on Twitter using the search function or by looking on their Web sites for a “follow me on Twitter” link. Make sure you have your own Twitter handle prominently displayed on your own site so visitors can follow you — and consider following back anyone who follows you. (This can become overwhelming, though, if you are a retail business with tens of thousands of customers.)
• Competitors. Follow your major competitors so that you can see how they use Twitter and track their promotions, sales and strategies. Remember, imitation is the sincerest form of flattery. If they’re doing something that works, you need to respond in some manner. You may even find ways to partner with competitors once you develop a connection on Twitter.
• Industry thought leaders. If you’re following the major players in your industry, you can forward their best tweets to your followers, through re-tweeting. As your followers come to rely on you as a useful source of ideas and information, you’ll build credibility and they’ll become more loyal to your brand generally.
• News outlets. Again, when you follow the major general news outlets — as well as industry publications — you’ll be able to quickly forward information to your network.

Tweet Useful Information — But Not Too Much

So many people are stymied by the question of what to tweet. There seems to be a sense of pressure to come up with five, 10 or even 25 brilliant things to say every day.

Don’t buy into this myth. The most common reason I stop following people is that they tweet TOO much, rather than not enough. After all, the Tweeters who are annoying are the ones who fill your screen with inane tweets, not those who supply two or three useful tweets each day — or even each week.

If you have a blog or regularly create new content on your Web site, you can automatically feed new posts to your Twitter account through any number of services. But make sure that you are active on Twitter in addition to this feed — nobody wants to follow a Twitter account that’s a robot.

Monitor Your Brand

Just because the pressure’s off to be a genius a dozen times a day, don’t think you can ignore Twitter when other work piles up. It’s important to monitor what people are saying about you and your business. You can set up an alert through services such as Social Oomph, TweetDeck or Monittor.

Some of the best examples of sophisticated use of social media occur when companies discover a disgruntled or confused customer through Twitter and quickly address the issue. You can even turn a potentially vocal critic into a fan of the company. People who are using social media like Twitter tend to be public about their feelings toward brands and businesses — so you want those feelings to be positive when it comes to you!

Advertise Events, Discounts and Contests

One terrific way to use Twitter is to advertise promotions or other special events at your small business. It rewards your followers for paying attention to your tweets and encourages them to do so in the future. Moreover, your tweets about contests or discounts are more likely to be re-tweeted, exposing more people to positive vibes about your brand.

Give More Than You Get

Don’t forget the key part of social media: social. You are part of a community on Twitter and it’s important to be a responsible and helpful member. That means giving more than you’re getting on Twitter.

Use Twitter to help industry newcomers network or to provide useful information, and you’ll boost your credibility and reputation. Not to mention that good karma is likely to find its way back around to help your small business — on Twitter and in the real world.