What Kind of Phone System Does Your Small Business Need?

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Unless your business is extremely large or has particular phone system needs, odds are that your small business will be looking for some version of a VoIP phone system. But that doesn’t mean that you shouldn’t do your research!

Small business phone systems offer features that are significantly different from your residential phone system. The biggest differences being that a small business phone system is designed to be able to handle larger volumes of calls at the same time, while also implementing tools such as intra-organization transfers and phone trees that your personal phone just can’t do.

When you’re choosing what kind of phone system your small business needs, the first decision that you’ll need to make is whether you will need a landline, a VoIP system, a virtual system, or a satellite phone. 

Next, you’ll need to decide whether you plan to host the system on-premises or in the cloud.

Most businesses find the cost of self-hosting to be prohibitively high, so the best option for many small businesses is to go with a cloud-based phone system.

The Six Types of Phone Systems for Business

Voice Over Internet Protocol (VoIP)

VoIP is what the majority of small businesses use for their phone systems today. The biggest advantages of VoIP systems are that they are typically quite inexpensive while being very flexible. A VoIP system for five employees will typically cost between $150-$300 a month, compared to a landline at $400-$500 a month.

They are also very easy to set up and use in most small businesses settings. All you need is an internet line and a VoIP handset to use at a desk like a normal office phone, or just a microphone and your computer to use on the go. Handsets range from $30 on the low end to several hundred dollars for the top systems if you need something more robust.

One of the best reasons to go for VoIP is flexibility. Unlike with a landline, you’re not tethered to your desk. You can leave the office and forward your incoming calls to your smartphone or any other line. The biggest caveat is that you need a reliable high-speed internet connection to maintain consistently clear phone calls. 

Some VoIP providers are known for having spotty service and dropping calls, so be sure to research the provider before making the final decision.


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Let’s face it. You might not have even realized that landlines are still a major player, right? 

Most small businesses that opt for a landline as their business phone system do so just because it’s the most traditional choice. But that’s a mistake that could be very costly if you don’t do your research first.

Also known as public switched telephone networks, or PTSNs, landlines are typically expensive, slow, and clunky due to the analogue systems that run on your local telephone company’s copper wires. But even for all the downsides, there is one MAJOR benefit for a small business to use a landline phone system over VoIP: reliability. 

If your Internet service is unreliable, weak, or non-existent, a landline phone may be your best option.

Landline phone systems are also best paired with office staff that work from one stationary location, without leaving the office.

Key System Units

While technically KSUs are a form of landline, they are worth mentioning here because they are still found in many organizations. A key system unit, or KSU, is a type of small business phone system that is particularly easy to use due to how similar it is compared to a residential phone system.

A KSU system has all the basic systems that a small business phone system needs, however, due to requiring an on-site central switching device (the key system unit) that manually determines the phone line selections, it lacks the portability and flexibility of more modern systems.

Due to these limitations, the key system unit small business phone system is really only suitable for small businesses with less than 40 operators.

There is a more modern variation of the key system unit, called a KSU-less system, which has many of the same small business phone system capabilities as the original system but is much more flexible and portable than its predecessor due to ditching the central switching unit.

Even the KSU-less system has its drawbacks, however. Even more limited than the KSU phone system, the KSU-less small business phone system only allows for around 10 operators and isn’t sold commercially – you request them from your phone provider.

Private Branch Exchange (PBX)

Another version of the landline phone system for small businesses is the private branch exchange system (or, PBX). This is a more advanced system than the KSU and KSU-less systems, and as such, it has more features. 

A PBX phone system uses programmable switching devices, allowing for the automatic routing of incoming calls and as such, can be used on much larger networks with 40 or more employees.

One of the biggest advantages of a PBX system is that they typically have an uninterruptible power supply built in, so a small business using a PBX phone system will have their phone system up and running much longer than other phone systems, even when the power goes out for an extended period.

Virtual Phone System Apps

I’m sure you’ve heard of Google Voice, no? A virtual phone system is an entirely virtual phone system that is accessed by an app on your phone or computer. Generally speaking, a phone system like this is best for a freelancer or solopreneur just getting started in business and needs a professional appearance. You can often use your existing phone number or set up a free call forwarding number.

A virtual phone system is also good for its ability to connect to the user from anywhere they have a phone or internet connection, or even to ring multiple devices at the same time.

But the downside is that a virtual phone system is not an actual phone system. Your calls are often still processed on your mobile or home phone network, which means you are charged for the call on the virtual system and use up your mobile or home phone minutes. Some virtual services allow you to make calls via internet connection when using the provider’s mobile app.

Another drawback of using a virtual phone system is that they often do not work outside of your home country. For instance, Google Voice only works in the US. Even if your small business is based in the US, and your phone number is based in the US, if you travel internationally your phone will not work once you leave the country (even when connected to the internet).

Satellite Phone System

Lastly, I would be remiss to discuss all the types of small business phone systems if I didn’t mention satellite phone systems. Satellite phones allow people in remote locations to make phone calls from pretty much anywhere in the world for a fairly affordable price.

Satellite phones used to be very cost prohibitive and only reserved for a very few businesses that needed truly global connectivity. But not anymore! Now monthly voice plans for satellite phone service start as low as just $65 per month.

Satellite phones rely on a network of satellites that are either fixed above the Equator (Geostationary), or in Low Earth Orbit (LEO) above the earth. Sat phones are rarely affected by violent storms and, depending upon their system architecture, work virtually anywhere in the world.

There are really only three providers that dominate the satellite phone system market: Iridium, Inmarsat, and Globalstar. Each has a different coverage map, and some are known for better quality service than others.

The best option for you hinges on one variable: where you plan to put it to use. Iridium’s 66 low Earth orbit (LEO) satellites offer connectivity to 100% of the globe. Inmarsat’s four satellites rotate in geosynchronous orbit over the equator at a staggering height of 32,000 miles. which cover 90% of the planet, only missing sight of the poles. And finally, Globalstar has a constellation of 48 LEO satellites that provide a solid coverage map, but leave out many important parts of the world.

Now, all of that being said, most small businesses will not need a satellite phone system unless they regularly have staff in remote parts of the world.

Hopefully, that has helped to give you an overview of the types of small business phone systems that are currently on the market and what kind of system might be right for your business. If you still aren’t sure, try asking yourself: 

Do you need a new phone system for your small business that requires physical desk phones? Or can you get by using your existing mobile phones? Do you want to host your own phone system? Or is cloud hosting more your style (and budget!)?

Thinking about what kind of phone system for small business is the best fit for your business now can save you lots of time and money later on.

Would you like to reduce the time your team has to spend on phone calls, while also ensuring you never miss another business call? Give Donna Digital Receptionists a try today with a free trial – no credit card required.

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