Telephone Systems for Small Businesses

Telephone Systems for Small Businesses

Jun 20, 2024 | Business Telephone Systems

Effective communication is essential to be successful. Choosing the right telephone systems for small businesses can significantly enhance productivity, streamline operations, and improve customer service. Here, we explore various options and features to help you find the best telephone system for your small business.

VoIP Telephone Systems for Small Businesses: Modern Communication Solutions

VoIP (Voice over Internet Protocol) telephone systems have transformed business communications. These systems allow voice calls over the internet, lowering costs vs. traditional phone lines without skimping on features. Small business VoIP telephone systems provide numerous benefits, including lower costs, flexibility, and they’re also easy to grow.

Most every current telephone system on the market is a VoIP system. Key systems (sharing a few phone lines) are an exception. There are also plenty of used telephone systems for sale that don’t make use of VoIP.

Benefits of VoIP Telephone Systems

  • Cost Savings: VoIP technology reduces costs by eliminating the need for separate phone lines. International calls and long-distance charges become more affordable.
  • Flexibility: VoIP systems easily scale as your business grows. They also support remote work, enabling employees to use their business phone numbers from anywhere.
  • Advanced Features: Video conferencing, call routing, text messaging, and real-time collaboration tools are available in many systems.

Enhancing Small Business Communications with VoIP

Effective communication is critical for success in today’s business environment. VoIP telephone systems for business enhance communication by providing reliable and versatile solutions. Because VoIP relies on high speed Internet, it’s capable of supporting more services than traditional analog phone lines.

Features to Look For in VoIP Small Business Telephone Systems

When choosing telephone systems for business, consider features that will improve your team’s productivity and customer interactions.

  • Conference Calling: Facilitate group discussions and meetings with ease.
  • Video Conferencing: Conduct face-to-face meetings without leaving the office.
  • Call Routing: Ensure incoming calls reach the right person quickly.
  • VoIP Technology: Enjoy clear voice calls and reliable connections.
  • Contact Center Solutions: Improve customer service with advanced call management features.

Hosted Phone Systems vs On-Premise: Which is Right for Your Small Business?

When selecting a telephone system for your small business, you will decide on either a hosted phone system or an on-premise solution. Both options offer distinct advantages and cater to different business needs. Understanding their differences can help you make an informed decision that best suits your operational requirements.

Hosted Phone Systems

What Are Hosted Phone Systems?

Hosted phone systems are also known as cloud-based or VoIP phone systems. A third-party provider handles management and maintenance for you. These systems live in a datacenter somewhere. They use the internet to handle voice and data communications.

Advantages of Hosted Phone Systems

  1. Cost-Effective: Hosted phone systems involve lower upfront costs since there is no need to invest in expensive hardware. You pay a subscription fee, which includes maintenance and updates.
  2. Scalability: Easily scale your system up or down based on your business needs. Adding new lines or features is straightforward. Just pay a fixed fee for each new extension.
  3. Flexibility: Hosted systems support remote work. Employees can use their business phone numbers from any location with an internet connection. This is ideal for businesses with remote or mobile workers.
  4. Automatic Updates and Maintenance: The service provider handles all system updates and maintenance for you. Your system is always up-to-date with the latest features and security patches.
  5. Disaster Recovery: Hosted systems offer robust disaster recovery options. The cloud service provider stores your data, making service restoration easier.

Disadvantages of Hosted Phone Systems

  1. Dependency on Internet Connection: The performance of hosted systems relies heavily on a stable internet connection. Poor internet quality can affect call quality and system reliability.
  2. Recurring Costs: While the upfront costs are lower, hosted phone systems involve ongoing monthly fees, which can add up over time.

On-Premise Phone Systems

What Are On-Premise Phone Systems?

On-premise phone systems, also known as PBX (Private Branch Exchange) systems, exist in your building. These systems require hardware and maintenance is your responsibility.

Advantages of On-Premise Phone Systems

  1. Control and Customization: On-premise systems offer greater control over your phone infrastructure. You can customize the system to meet your specific business requirements and have direct access to the hardware.
  2. Reliability: On-premise systems are not dependent on internet connectivity for internal calls. This can lead to more reliable internal communications.
  3. Lower Long-Term Costs: Although the initial investment is higher, on-premise systems can be more cost-effective in the long run. You can change VoIP providers when a better deal comes along. Some organizations will keep a few POTS lines around as backup.
  4. Enhanced Security: With on-premise systems, you control more data. This might mean potentially greater security compared to cloud-based solutions.

Disadvantages of On-Premise Phone Systems

  1. High Upfront Costs: Setting up an on-premise system requires significant investment in hardware, installation, and configuration.
  2. Maintenance and Updates: Somebody should be in charge of maintaining the system, applying updates and managing moves, adds and changes (MACs). It will either be your IT team or your telecommunications partner. This can be resource-intensive.
  3. Scalability Challenges: Scaling an on-premise system can be more complex and costly. The job might require additional hardware and potential downtime during upgrades.
  4. Limited Flexibility: On-premise systems may not support remote work as seamlessly as hosted solutions. You’ll need your IT Department or IT Service Provider to create a remote access solution for you. This might limit flexibility for mobile or remote employees.

Which Type of Small Business Telephone System Is Right for Your Business?

Your choice largely depends on your business’s specific needs, budget, and IT capabilities.

  • Hosted Phone Systems are great for small businesses. They are affordable, easy to expand, and require little maintenance. They are especially suitable for businesses with remote or mobile workers and those seeking to avoid large upfront investments.
  • On-Premise Phone Systems are better suited for larger businesses. They often require full control over their phone infrastructure and have the resources to manage and maintain the system. They are also advantageous for businesses that prioritize reliable internal communications and enhanced security.

Be sure to evaluate your business requirements to determine the best telephone system for your small business.

Choosing the Best Telephone System for Small Business

Choosing the right phone system for your small business means thinking about things like team size, budget, and communication needs. You also need to pick a reliable vendor who will suggest the best system and set it up correctly for you.

Business Telephone System Providers

Several business telephone system providers offer tailored solutions for small businesses. Our preferred platforms come from Avaya. They offer Avaya Cloud Office and Avaya IP Office. These platforms provide comprehensive VoIP telephone systems from 2 extensions to 2000.

  • Avaya Cloud Office: This cloud-based solution integrates voice, video meetings, messaging, and collaboration tools in one platform. Your only on-premises hardware are desktop phones. You can skip hardware entirely by using softphones. Cloud Office is ideal for businesses looking to streamline their communications with a unified system and outsource as much of the calling system as possible. Your services are provided with a fixed monthly subscription fee per user.
  • Avaya IP Office: Offers robust VoIP phone service. It includes features like conference calling, call routing, and customer service management. You can also keep a small number of analog telephone lines around as backup. Avaya IP Office typically slots in with larger businesses who require redundant calling paths for reliability and custom call center solutions.

Wireless Telephone Systems for Small Business

Small businesses can utilize wireless phone systems to move around the office freely without being tied to a desk phone. Options exist for both hosted systems and on-premise systems. They integrate with your calling platform using a technology known as SIP. These systems are perfect for businesses with mobile employees or those needing flexibility in their office layout.

Key Features of Wireless Systems

  • Mobility: Employees can make and receive calls from anywhere in the office.
  • Integration: Seamless integration with mobile phones and other devices.
  • Scalability: Easy to add more handsets as your business grows.


Investing in the right telephone system for your small business can greatly enhance your communication capabilities and efficiency. When choosing a telephone system for your business, make sure it meets your needs and goals. This could be a VoIP system, wireless system, or a solution from providers like Avaya. Embrace modern communication technology and watch your business thrive.

If you’re having difficulty deciding on the right path to take for your new phone system, give us a call at 410.543.8200 today. We’ve installed telephone systems for small businesses since 1995, and we’d love to help you, too.

Travis Fisher

Travis is Inacom’s Executive Vice President, tasked with assisting customers with their web based marketing initiatives. He’s kinda famous for his BBQ. He lives in Easton, MD with his amazing wife, two kids, and two dogs.

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