Small firms could create one million extra apprenticeships if they had more support from the Government, says a new report.
The Federation of Small Businesses (FSB) predicted a fall in the number of companies taking on an apprentice because of the cost of training.
Smaller companies were crucial to achieving the Government's target of having three million new placements by 2020, but extra support was needed, it was argued.
FSB chairman Mike Cherry said: "Smaller businesses are taking on more apprentices than ever before and a quarter of our members say they are considering employing an apprentice in the future.
"This presents a huge opportunity and is great news for vocational training, which has become an increasingly attractive option for young people put off by the rising cost and uncertain returns of a university degree.
"We are at a make-or-break moment. We need the Government to hit the right balance between incentives and support. While many small firms are committed to apprenticeships, many more continue to be worried about the time and personal commitment required."
Skills minister Robert Halfon said: "Many more small employers could be reaping the benefits of apprenticeships, transforming life chances and providing a ladder of skills and training opportunities for people across the country.
"To make sure that businesses can invest in skills with confidence, we are driving up the quality of apprenticeships by giving employers the power to design and deliver the training they know works.
"Through the new apprenticeship levy we are also boosting funding for apprenticeships and helping to build the highly skilled future workforce that the UK needs."