The Federation of Small Businesses (FSB) says UK broadband is not fit for purpose and a major government rethink is needed.
It also states that, compared to other nations, the UK's broadband target is simply not ambitious enough.
It is calling on the government to commit to delivering a minimum of 10Mbps (megabits per second) for all homes and businesses by 2018/19.
It would like to see this rise to 100Mbps by 2030.
"If small businesses are to thrive and prosper and contribute to a growing economy, they need universal access to what is now considered the fourth utility," concludes an FSB report on the current state of broadband.
However, the government and BT have said that the FSB's findings do not match reality.
The report indicated that:
• 94% of small business owners consider a reliable internet connection to be critical to the success of their business
• 45,000 UK small businesses are still on dial-up speeds
• Only 15% of firms say they are very satisfied with their broadband provision.