Understand small business phone systems and choose the right one.

How to Choose a Small Business Phone System

Daniel WeissLast updated on January 2, 2024
18 min

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The right small business phone system makes life at work better and easier for everyone in the company.

And in terms of configurations and features, there’s more choice than ever when it comes to selecting a small business phone system. Despite this, many businesses are still running on traditional phone systems and believe they don’t have a good reason to change.

However, a truly unified communications system today requires switching over to VoIP phone systems and cloud-based phone systems, which can offer a feature-rich and intuitive upgrade to older analog, PBX, or IP systems.

If you’re considering purchasing or updating a small business phone system, it’s advantageous to understand the pros and cons on offer from different systems.

Among the considerations, you’ll need to think about the costs, features, and your needs for inbound and outbound calling.

Here we take a closer look at everything you need to help you find the right small business phone system for you**.**

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What Is a Small Business Phone System?

Many office phone systems are designed for big 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 and flexibly 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.

At a base level, a small business phone system is a set of office telephones that are interconnected and provide features like call handling, call transferring, conference calling, and voicemail inboxes.

These may consist of a few office telephones, as well as a PBX phone system that has a certain number of outside lines. A small business phone system is necessary for your company if you need to handle more than a couple of calls.

By getting the right system, you’ll also be able to support more sophisticated equipment and scale up as your business grows. Meanwhile, it will empower every department, whether sales or operations, to work more effectively and provide a stronger customer experience.

In short, the right small business phone system will help you achieve your business goals.

Types of Business Phone Systems

To make any purchase decision you first have to understand what’s on offer. Small business phone systems come in a variety of shapes and sizes. The first thing to understand is the differences between analog and digital systems, which work in very different ways.

Analog phone systems are quite basic. 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.

The main differences revolve around how your voice signals are transmitted: via an internet connection (data packets, digital) or physical cables (electrical current, analog).

Another noticeable difference between legacy phone systems like traditional desk phones and modern ones like cloud-based calling systems is 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).

Looking at the analog/digital split in more detail, these are the four types of phone systems and how they work:


Transmits voice signals over copper wires.

PBX Phone System

A term for private branch exchange, comprising multiple analog phone cables where each one has the capability of 23 individual lines.


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


Voice over Internet Protocol also uses data packets to transmit voice signals over the internet. With a VoIP system, though, you can also share information between your phone system and other valuable software tools to give you omnichannel communication benefits and unlock the benefits of cloud-based calling.

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.

Having the flexibility to enable remote or hybrid work is key to retaining a great team. In fact, research shows that 52% of employees state they would like their organization to adopt more flexible models, according to McKinsey. Further research suggests more than half of workers would even consider leaving their jobs if flexible work wasn’t an option.

Put simply, as your business grows and your needs change, using VoIP calls 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 in the process of evaluating small business phone systems has a lot to do with whether you have an existing 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 telephone system, you can either continue using it or upgrade it to a modern system. By upgrading it to a phone system that offers greater features and flexibility, you can grow faster and stay ahead of your competition.

Software solutions like cloud-based calling capabilities, for example, allow you to streamline your sales and support operations. This will both increase revenue and enhance the customer experience. It’s important because, if you’re not measuring up to your competition, your customers could shift their loyalty to another brand.

Additionally, many cloud-based VoIP phone systems have the capability to integrate and connect with other software business tools, streamlining your business functions.

But the main thing is finding a solution that will give your sales and support teams equal—or better—capabilities compared to your competitors.

How do cloud VoIP services help small businesses?

Cloud-based calling systems make it quick and easy to set up a call center for inbound calls, outbound calls, or both. In the era of hybrid work, cloud-based solutions also offer the flexibility to set up a call center wherever it’s needed, whether teams are working from home, the office, or a mixture of the two.

Enabling these core business functions is important, but if now isn’t the right time to do it, having the infrastructure in place to make VoIP calls is also a forward-thinking move for small businesses. The right time to start using a call center might be right around the corner and having a solution that can rapidly scale depending on your needs is important.

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 business phone system, which enables the use of VoIP integrations with your other business tools. This will help your team work more efficiently and deliver a more satisfying customer experience while being able to scale to your needs.

But if you already have an existing solution, or don’t have a reliable internet connection, it is worth looking at the pros and cons of cloud-based phones and hard phones.

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 services. Softphones bring up customer information and access to other features on the user’s device screen.

Hard phones typically refer to traditional office desk phones. They usually operate using the PBX setups outlined above and local analog phone lines, but they can also dial over an IP network if they’re designed to do so.

Hard phones typically lack the easy integrations and flexibility of cloud-based phones but can be more reliable in terms of call quality if you have a poor internet connection.

Let’s take a look at some of the other differences between cloud-based phones and hard—or desk—phones.

Softphones or cloud-based phones for small business


  • Less expensive—they don’t require purchasing extra equipment

  • Easily scalable as teams grow or change

  • Has the capability to function for distributed teams and remote teams

  • Security handled by software company


  • Potential for lesser call quality if there is low internet bandwidth

Hard phones for small business


  • Not reliant on internet access


  • More expensive

  • Users need to be in the office to use them

  • Requires a physical phone at each desk

  • Security measures must be applied in-house

  • Not future-proof

Frequently Asked Questions About Small Business Phone Systems

Choosing the right small business phone system is an important task. Getting it right can revolutionize your business with a unified communications system that benefits both your employees and your customers alike. We’ve supported many businesses on this journey, and here are three of the most frequently asked questions we hear.

What are the advantages of a cloud-based phone system for small businesses?

There are many benefits to using a cloud-based phone system in your small business, including:


Using a cloud-based system to make VoIP calls can help you save considerably when compared to traditional analog phone services. With cloud-based calling, digital signals are sent via the internet, meaning you don’t have to pay for rental costs associated with traditional phone lines. Likewise, cloud-based calling apps can be added to existing hardware like mobile phones or computers. That means there isn’t a need to purchase additional physical phone systems.


It’s no longer practical or reasonable to expect people to be tied to a desk when they need to make calls. Using a cloud-based system, employees can make calls from anywhere. That includes working remotely from home, in the office, or a mixture of each. Meanwhile, businesses can rapidly and flexibly scale the solution without needing to reorganize their office space to accommodate new physical phone systems as business needs change.


Cloud-based calling systems can plug directly into existing business apps, offering new features like AI transcription or sales leaderboards, and creating a more seamless experience for customers and employees. In particular, CRM integrations can be set up in just a few clicks, enabling sales and support teams to view details about customers, automatically gather data, take notes, and direct or log calls with customized workflows.

Do business phone service providers provide new business phone numbers?

Choosing a cloud-based calling system can provide access to many different types of phone numbers that vary in capability and in cost. Availability will vary depending on geographic regions and compliance requirements, but here are the types of numbers offered:

  • Geographics/Local Numbers: These are numbers assigned to a specific geographic region, which are useful as the main business number.

  • National Numbers: These numbers are designed to be non–region specific and can be reached by an entire country at the same cost.

  • Toll-Free Numbers: Toll-free numbers are free to call, meaning the business pays the charges on behalf of the customers. They are only reachable within the same country, though it is possible to extend in some circumstances, for example, adding both the USA and Canada.

  • Mobile Numbers: These will be assigned by country and in specific ranges and can be easily identified apart from local numbers.

  • IVR Numbers: Interactive Voice Response (IVR) numbers allow a pre-recorded voice to communicate via the dial tone, for example providing options such as “Please press 1 to speak to Sales”. This enables seamless direction of callers to someone who can help with their query.

How do I use my existing phone number with Aircall?

Updating your phone system doesn’t mean you need a new phone number. Porting an existing phone number to Aircall is a simple process, all that’s required is a few key pieces of information. You can learn more and begin the process of porting your number to Aircall here.).

Important Small Business Phone System Features

Your small business telephone system is a critical tool to advance your company’s mission and business development plan.

When looking at the available features of phone systems, consider which of them will fulfill your current needs and take your company into the future without breaking your budget.

If the sheer number of options and features is overwhelming, cover the basics first. From there, you can weigh the benefits and costs of additional features. Some features you might want to consider are:

  • Remote work compatible

  • Interactive Voice Response (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

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 for a phone service vary significantly from one business to another. Small business phone systems don’t come in one-size-fits-all capability. However, VoIP technology has evolved. This gives businesses lots of options to choose from and the benefit of being able to customize the perfect phone system for their business communications. Despite this, not all VoIP providers are equal.

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 communications—when looking at different VoIP providers.


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 business telephone system hasn’t been thoroughly field-tested.


A demonstration of the business telephone system will help you to see exactly how the system works. Your solution should be intuitive while offering advanced features. By setting up a demo or trial, users can share valuable feedback.


Ask about what kind of downtime you can anticipate. Go beyond that to ask about the contributing factors and how the company will mitigate them. Inquire about any service level agreements (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 or features when inquiring.


The demo is the best time to ask about the business telephone system’s ability to scale. 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 and will affect how you interact with customers, partners, and clients, 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? Will it be simple to maintain over a long period of time?

Does Your Business Phone Integrate 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 telephone system separately. Taking extra steps can cost you time and money.

By having a siloed approach to your business processes, employees make mistakes. As a result, key information may get lost in the mix. Mistakes and misinformation can be expensive and embarrassing for your company.

These problems are solved when you have unified communications systems and 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 telephone 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 business communications.

  • Increases 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 five 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. On top of that, a cloud-based calling system offers flexibility so hybrid teams can work anywhere while still accessing the same intuitive features.

Getting a business telephone system that can scale will make it possible to:

  • Reduce your expenses

  • Hire fewer employees

  • Adjust for seasonality

Software integrations, meanwhile, 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 telephone system might even help you become a dominant brand leader within your industry.

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

Your website makes it possible for people to learn about your company. And that’s true whether they’re in close proximity to your business or a continent away. The speed of modern business 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 research, eCommerce sales are continuing to accelerate. Ecommerce sales account for $4.9 trillion worldwide and are forecast to grow by another 50% in the next four years.

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 of a Small Business Phone System

If we step back and look at the bigger picture, you may wonder how all these features and software integrations will help you achieve results. 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 calls: Missed calls mean lost business. A call center can handle large volumes of calls, so you never miss a call.

  • Automate workflows: Save on manual processes like transferring calls, updating multiple systems with the same information, while additional features enable 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, drive more brand loyalty, and ultimately unlock more sales.

Ready to unlock the benefits of cloud-based calling for your business? Try Aircall for free.

This post was originally published on August 20, 2020, and has since been updated.

Published on April 22, 2022.

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