Small Business Owner’s Guide To Business Phone Systems

Whether you’re starting a business and need a phone system or you’re ready to upgrade your existing system, the first step is to understand the different types of business phone systems.

In this post, we’ll review three different types of business phone systems: key phone systems, private branch exchanges, and Voice over Internet Protocol. We’ll explain what they are, what businesses they’re best for, and help you get started on the path to finding your best phone system.

Quick Comparison Of Business Phone Systems

Before diving into the specifics of each type of phone system, here’s a quick overview of each.

Key Telephone Systems

A key phone system (also known as key service utility systems) is your basic business phone system that uses traditional landline service.

You won’t find a lot of bells and whistles with these systems. Multi-line desk phones are used to make and receive calls. When a call is placed or answered, a light beside the line number will light up, indicating the line is in use.

Key phone systems generally have a few basic features, such as call hold, intercoms, and speakerphone. These features can be enabled by simply pressing buttons on the desk phone.

While these systems may work for smaller offices that don’t need advanced features, there are a few drawbacks to consider.

One drawback is that a key system unit (or KSU) must be installed on your premises. Installation, setup, and maintenance of this system can get expensive, as a tech will be required to come to your office to service the system. A KSU is generally mounted on a wall, while you may also opt for a KSU-less unit, which can sit on a desk.

Another drawback is that these systems use a landline service. This is a problem for a few reasons. First, the use of landline service limits the number of lines you can have in your workplace. Another drawback is that landline service is being phased out — primarily due to the high cost of maintaining copper wires and other infrastructure — and is becoming more expensive for customers.

Private Branch Exchange

Private branch exchange (or PBX) phone systems are more sophisticated than key telephone systems. These systems include more advanced features such as music-on-hold, call routing, and call queueing.

With a PBX system, employees have extensions that are used to make internal calls. External calls are made using lines connected to the public switched telephone network (PSTN). A PBX system can be used for multiple lines at multiple locations.

Similar to key telephone systems, equipment is installed on-premises for PBX systems. These systems are installed by a service technician, who may also handle maintaining the system. However, businesses with IT teams may opt to handle the required maintenance.

PXB systems are more expensive upfront due to the installation of hardware. However, these custom systems can be less expensive over time than key phone systems, especially if maintenance is performed by an in-house IT team.

While these systems work for larger businesses with multiple locations, they are quickly becoming outdated as more businesses are switching to modern phone systems.

Private Automatic Branch Exchange

Private automatic branch exchange (PABX) phone systems are very similar to PBX systems. The primary difference is that they aren’t quite as complex and don’t have as many advanced features.

PABX systems are suitable for medium businesses, while PBX systems are the better choice for larger businesses that rely heavily on their phone systems.

Voice Over Internet Protocol

Voice over Internet Protocol (VoIP) telephone systems are completely different from the other systems in this post. Instead of physical lines, VoIP systems (also known as IP PBX systems) use the internet for making and receiving phone calls.

There are several reasons why more businesses are switching to these modern systems. VoIP systems do not require the costly infrastructure of landline systems, which are expensive to install and maintain. Because of this, you’ll find that VoIP phone service is typically more affordable, despite having more features.

Speaking of features, VoIP systems make it possible to do more than just make a phone call. Many systems have advanced features, integrate with CRMs and other software, and can be used for other methods of communication, such as social media and SMS/MMS messaging.

VoIP also allows you to add multiple extensions and lines without the need for an on-site technician. These changes can typically be made quickly online or over the phone and can be set up on the same day.

There are two main types of VoIP systems to consider.

On-Premise IP PBX

With this system, hardware will be installed at your business. These systems are generally more flexible and customizable. In most cases, a SIP trunk can be used to improve call quality and reduce costs.

The downside is that this option does come with higher upfront costs, although cost savings may be realized over time. This option is best for larger businesses with 50+ employees. It’s also best for businesses that have their own IT teams that want to use their own security solutions to secure data and ensure privacy.

Hosted IP PBX

Also known as cloud IP PBX, this option doesn’t require you to have any equipment aside from your desk phones, modem, and router. Maintenance and updates are handled by your provider.

A hosted IP PBX system is essentially plug-and-play. Sign up for service, connect your desk phones (or softphone options like your smartphone, laptop, or cell phone), log into your account, set up your lines, features, and preferences, and your system is ready to go.

This is a cost-efficient option for many businesses, as you don’t have to purchase expensive equipment upfront. It’s also easy to set up and use, even if you don’t have an IT expert on your payroll. Simply sign up for a plan and make a monthly payment to your provider, and you have an advanced yet easy-to-use phone system.

The only potential drawback is security, as this is handled by your provider. Fortunately, there are many reputable VoIP providers that go above and beyond to keep your data private and secure.

Which Business Phone System Is Right For You?

With an understanding of the different business phone systems, you should have a better idea of which will work for your business. Here’s a recap:

• Key phone systems use landlines and may be limited in the number of available lines, so they are best for businesses with fewer than 50 employees. Though outdated, these are used by businesses that want a system with basic features.
• PBX systems are better for medium to large businesses that want a more customized solution. These also use landlines but have more advanced features and are customizable. Upfront costs are expensive.
• VoIP systems can be hosted on-premises or in the cloud. These offer the most advanced features and are typically the most cost-efficient options for businesses of all sizes.

One thing worth keeping in mind is that landline systems may soon no longer be an option. As the cost for maintaining and upgrading infrastructure is so expensive, many providers are abandoning these systems in favor of VoIP. This trend is only expected to continue, as VoIP offers more benefits to carriers AND customers.

With that being said, we recommend VoIP phone systems. These phone systems support numerous lines and extensions, allow you to create a full communication suite, and offer reliable service at competitive pricing. VoIP phone systems work for businesses of all sizes, are scalable to grow with your business, and are easy to set up and use.

If you’re interested in VoIP but don’t know where to get started, check out the best VoIP phone systems to find options for every business.