Understanding Small Business Phone Systems | Aircall Blog

How to Choose a Small Business Phone System

Understand small business phone systems and choose the right one.
Daniel Weiss

The right small business phone system makes life at work better and easier for everyone in the company. The market offers many different configurations of small business phone systems and they have more features and capabilities than ever before. Many businesses are still running on traditional phone systems and believe they don’t have a good reason to change.

These days, it’s common for businesses to run on Internet Protocol (IP) networks. These systems are used to connect employees and devices. Many companies are now switching over to VoIP phone systems and cloud-based phone systems for the same ubiquitous nature and versatility.

If you’re considering purchasing or updating a small business phone system, it’s advantageous to understand small business phone systems, especially the differences between hard and soft phones. Among the considerations, you’ll need to think about the costs, features, and your needs for inbound and outbound calling.

What Is a Small Business Phone System?

Many office phone systems are designed for large companies that have large numbers of employees working in multiple locations. Small businesses, however, often lack the budget or infrastructure for enterprise phone systems; yet, they still need to have a phone system that gives them the ability to communicate consistently with their partners, vendors, and customers.

To find the right features and options for your small business phone system, it helps to have a basic understanding of how different types of phone systems work.

A small business phone system is a set of office telephones that are interconnected and provide advanced features like call handling, call transferring, conference calling, and voicemail inboxes. Small business phone systems may consist of a few office telephones, as well as a PBX system that has a certain number of outside lines. A small business phone system is right for your company if you need to handle more calls. By getting the right system, you’ll also be able to support more sophisticated equipment and scale up as your business grows. The right small business phone system will help you achieve your business goals.

Small business phones can operate over a public switched telephone network (PSTN), or over the internet using VoIP. Some small business phone systems function by using a combination of these systems.

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Businesses have two types of small business phone systems to choose from including analog and digital systems, which work in very different ways. Analog systems are pretty straightforward. In simple terms, these legacy phone systems send electric signals through copper wires to the phone system. Digital phone systems operate by sending signals as “packets” of voice data over the internet and receiving them using specific software.

Types of Business Phone Systems

Learning a bit more about the basic differences between small business phone systems will help you make an appropriate purchasing decision.

The main differences revolve around how your voice signals are transmitted: via the internet (data packets) or physical cables (electrical current). Another noticeable difference between traditional phone systems and modern ones is regarding functionality. Cloud-based phone systems are increasingly becoming popular because they allow you to do many things that you can’t do with a plain old telephone system (POTS). 

The four types of phone systems and how they work are: 

1. Analog – Transmits voice signals over copper wires.

2. PBX – A term for private branch exchange. An office setup comprising multiple phone cables where each one has the capability of 23 individual lines.

3. IP PBX – A variation of the PBX system where voice signals ultimately travel in data packets over the internet rather than through physical cables.

4. VoIP – Voice over internet protocol also uses data packets to transmit voice signals over the internet. With a VoIP system, you can also share information between your phone system and other valuable software tools to give you omnichannel communication benefits.

VoIP phones are quickly becoming the preferred small business phone system, not only because they offer more features and functions, but because they enable remote work and virtual call center capabilities. All remote call agents need is a working internet connection, and perhaps, a headset. Flexjobs reports that 82% of workers that have the flexibility to work remotely will remain loyal to their companies, which means decreased turnover rates. Moreover, CBS News reports that companies utilizing remote workers generally have 10% higher revenue.

As your business grows and your needs change, a VoIP phone system gives you competitive advantages.

Choosing a Small Business Phone System

There are several different types of business phone systems available, each with its own set of pros and cons. Where you begin the process of evaluating small business phone systems has a lot to do with whether you have an existing small business phone system that you want to upgrade or whether you’re establishing a new phone system for the first time.

If you have an existing office phone system, you can either continue using it or upgrade it to a modern phone system. By upgrading it to a phone system that offers greater features and flexibility, it could help you to grow your business faster and stay ahead of your competition. Software solutions allow you to streamline your sales and support operations which will increase revenue and enhance the customer experience. If you’re not measuring up to your competition, your customers could shift their loyalty to another brand. 

The big question you face is whether it’s the right time to switch to an internet-based solution, also known as a VoIP phone system and whether it will give your sales and support teams the same capabilities as your competitors. Additionally, many cloud-based phone systems have the capability to connect with other software business tools, streamlining your business functions. 

Benefits of the Cloud

Cloud-based solutions make it quick and easy to set up a call center for inbound calls, outbound calls, or both. Enabling these core business functions is important, but if now isn’t the right time to do it, having the VoIP infrastructure in place is a forward-thinking move. The right time to start using a call center might be right around the corner.

If your small business is a startup and you don’t have any existing cables, contracts, or equipment to contend with, the clear choice is to implement a cloud-based phone system, which enables the use of VoIP integrations with your other business tools. This will help your team work more efficiently and reduce errors.

But the type of solution you choose will depend on a variety of factors, like current infrastructure setup, cost, plans for scaling, and internet connectivity.

Cloud-Based Phones vs. Hard Phones: What to Know

To take the confusion out of understanding phone systems, let’s take a look at the differences between cloud-based phone systems and hard phone systems. Some of the things to consider when comparing cloud vs. hard phones are:

  • Call experience
  • Reliability
  • Security
  • Cost installation time
  • Scalability
  • Features and options that respond to business needs and functions

Cloud-based phones, or softphones, use software that’s installed on devices like computers, mobile devices, laptops, and tablets to place calls over the internet using VoIP. Softphones bring up customer information and access to other features on the user’s device screen. They also have features that are built into the app like microphones and cameras.

Hard phones typically refer to traditional office phones. They usually operate using PBX setups and local lines, but can also dial out over an IP network if it’s designed to do so. Hard phones typically lack the easy integrations and flexibility of cloud-based phones but are seen by many as being more reliable in terms of call quality, since they don’t rely on an internet connection to operate. 

What are some of the other differences between cloud-based phones and hard phones?

Hard phones for small business

  • Uptime advantages (not reliant on internet access)
  • Consistent user experience
  • More expensive
  • Users need to be in the office to use them
  • Requires a physical phone at each desk
  • Run on a separate network than other internet-based platforms
  • Security measures must be applied in-house

Softphones or cloud-based phones for small business

  • Potential for lesser call quality when applications compete for internet bandwidth
  • Less expensive–They don’t require purchasing extra equipment
  • Allows employees to work away from the office
  • Requires installing an application on an existing infrastructure
  • Has the capability to function for distributed teams and remote teams
  • Security handled by software company

Important Small Business Phone System Features

Your small business phone system is a critical tool to advance your company’s mission and business development plan. When looking at the available features of phone systems, it’s wise to be forward-thinking and consider which of them will fulfill your current needs and take your company into the future without breaking your budget. If the sheer amount of options and features are overwhelming you, it’s a good strategy to cover the basics first, and then weigh the benefits and costs of additional features.

  • Remote work compatible
  • IVR menu capabilities
  • Automatic Sales Dialing (ex Power Dialer)
  • Mobile phone compatible
  • Integrations with CRMs and other business tools
  • Personalized Voicemail
  • Caller ID
  • Conference calling and call whispering
  • Note-taking and sharing features
  • Microphone muting
  • Custom music for hold or messages
  • Headset compatibility
  • Call recording accessibility
  • Speed dialing/redial
  • Warranties and remote support
  • Call forwarding

Advanced technology makes it possible to offer an interactive voice response system, or IVR, as a means of self-service for your customers. IVR systems are right for some companies to reduce call volumes for issues that correspond to routine tasks. This type of system makes it possible to reserve call representatives’ time for handling more complex customer issues. 

Once you’ve made your final choices of phone system features, you can work on training your call representative to use them to their maximum capability.

Evaluating Business Phone Systems

The business needs of a phone service vary significantly from one business to another. Small business phone systems don’t come in one-size-fits-all capability. VoIP technology has evolved, giving businesses lots of options to choose from and giving them the benefit of being able to customize the perfect phone system for their business.

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A sensible approach to evaluating small business phone systems is to consider the issues of reliability, usability, availability, cost, scalability, and vendor reputation, in addition to the features you need for your business.


Inquire if the vendor can give you an idea of the anticipated failure rate. This is an important factor because you don’t want to be the first to find out that you have a vendor that’s new to the market and the system hasn’t been thoroughly field-tested. 


A demonstration of the system will help you to see exactly how the system works. In particular, your users will have valuable feedback about how they think it will work for them.


Ask about what kind of downtime you can anticipate, as well as the contributing factors and how the company will mitigate them. Inquire about any SLAs to ensure quality. 


What are the “all-in” costs of hardware and software? Consider outbound-dialing-minute costs, long-distance, and additional numbers/lines when inquiring.


The demonstration stage of the sale is the best time to ask about the capability of the system to scale up or down according to future business needs. Go over the potential cost increases and decreases depending on usage. In addition to calculating system costs, forecast things like training costs, network costs, and utilities.

Vendor Reputation and References

Your small business phone system is an investment, so it’s important to consider the reputation of the vendor. Your industry partners and associates may have valuable feedback about the experience and financial strength of various vendors.


Learn more about how the system was designed. Does it work out of the box without needing additional technology to operate correctly?

Does Your Business Phone Work With Other Business Tools?

With pitches for new technology littering your inbox every day, finding a product that actually improves business processes is a breath of fresh air. If you’re like a lot of SMB owners, you gravitate toward a few reputable products that you’re certain have an impact on the bottom line.

However, if all your tools operate in isolation from one another, your employees have to update each system separately. Taking extra steps can cost you time and money. By having a siloed approach to your business processes, employees make mistakes and key information may get lost in the mix. Mistakes and misinformation can be expensive and embarrassing for your company.

These problems are solved when all data is automatically centralized in a single tool. With a cloud-based phone system and the right software integrations, key contact info — like caller history, call recordings, and agent notes — can be instantly aggregated together.

Enhancing the Performance of Your Business

Here are some other ways a cloud-based phone system and software solutions can enhance your existing business software: 

  • Combines other software solutions with your CRM.
  • Allows you to share notes and information internally.
  • Enables an omnichannel approach to internal and external communications.
  • Increase productivity for inbound calls and outbound calls.
  • Offers call whispering so you can coach call agents during calls.
  • Frees up time by automating mundane or repetitive tasks.
  • Gives you reliable, actionable data in real-time.

Integrated software solutions help your employees work more efficiently and provide unmatched, personal service.

Choosing a Phone System That Can Scale 

After you’ve worked hard to establish your business, you want to see it grow. You’ve probably already set some goals for where you hope to be in the next 5 years, 10 years, or even further out. 

But growth doesn’t happen all at once, and you don’t want to be limited by your tech stack when it takes off. It may be time to consider switching to a cloud-based phone system that lets you scale your operations as your company experiences success. By planning ahead with the right small business phone system, it’s one less problem to deal with, and you can focus on growing in a financially healthy way.

Getting a phone system that can scale will make it possible to reduce your expenses, hire fewer employees, and make it possible to scale your operations up (or down) with inherent seasonality. Software integrations work harder, so your employees don’t have to. 

By streamlining your operations, you could position your business to offer more products or services. The right phone system might even help you become a dominant brand leader within your industry.

Remote teams and distributed teams might not be feasible right now, but the advantages of developing a call center on-site or off-site will be easier to achieve if you already have the right small business phone system in place.

Best Ways to Use Your Phone System to Grow Your Small Business

Your website makes it possible for people to learn about your company whether they’re in close proximity to your business or a continent away. The speed of modern communication makes it possible to expand your market share exponentially. While customers may find your website, they need to be able to order products and services online and speak to a representative when they have questions. 

According to Forbes, retail sales are down and eCommerce sales are spiking. Ecommerce sellers have enjoyed a 129% year-over-year growth in the U.S. and Canada as of April 21st. Online retail orders increased by 146%. With the shift to online sales, call centers with cloud-based phone systems and software integrations will position your company to keep up with industry growth. 

Cloud Phone System Features to Know

Cloud-based phones with a long list of features offer the most opportunities for growth hacking. Here’s a list of possibilities on how to take advantage of this tech: 

  • Set your phone system to open automatically according to business hours.
  • Record a customized message for off-hours callers.
  • Automatically route calls to the proper teammates and set up an IVR guide.
  • Use your cloud-based phone system dashboard to set up a virtual call center.
  • Use a shared call inbox and call commenting to follow up on tasks.
  • Update all systems in real-time.
  • Queue inbound callers until an agent can accept the call or offer a callback.
  • Take and place an unlimited number of calls.
  • Record calls for quality and training purposes.
  • Launch calls using a single click or use the power dialer for calling efficiency.
  • Forward calls to a mobile device.
  • Tag calls for appropriate follow-up.
  • Use the after-call work feature to prepare calls for the next step.
  • Use call whispering to monitor and coach call agents in real time.
  • Combine your phone system with your CRM.
  • Use dashboard analytics to evaluate call metrics.
  • Use the live-feed feature to get a real-time perspective of team activity to quickly shift resources.

Which features you find most impactful will vary according to individual circumstances. However, these are all considered valuable features for growing your small business using your phone system. 

Maximizing the Benefits from a Small Business Phone System 

If we step back and look at the bigger picture, you may be wondering how all these features and software integrations will help you achieve the results you’re looking for. These features provide outstanding benefits when you get the right small business phone system.

  • Improve efficiency – Software solutions are designed to streamline the processes for customer support and sales, allowing you to shorten turnaround times and move leads through the sales funnel faster.
  • Drive professionalism – Excellent customer experiences enhance your branding and increase sales. A call center can make your business appear established and reputable.
  • Can support international numbers and call agents in foreign countries – Broadens your customer base as far geographically as you wish.
  • Prevent missed callsMissed calls mean lost business. A call center can handle large volumes of calls, so you never miss a call.
  • Automates workflows – Saves on manual processes like transferring calls, updating multiple systems with the same information, and allows you to call back people in the queue without losing their place in line.

All the features and benefits of a cloud-based phone system work together. With the right phone system, you can enhance the customer experience and drive more brand loyalty.

The phone system for modern business