Telephone Systems for Small Business - The Complete Guide

Telephone Systems for Small Business - The Complete Guide

Contents of this guide:

Telephone systems are a vital asset for small businesses, giving customers a reliable way to get in touch—and allowing prospects to speak to a member of your team.

The value of a strong, reliable phone system cannot be understated. But the telephone market is very confusing, and with so many options on the market finding the right one of your business is a challenge.

We’ve put together this guide to help you find the right system for your small business, and to understand the options available to you.

What is a Small Business Telephone System?

A telephone system is a piece of software or hardware that controls your businesses incoming and outgoing telephone calls. Most business telephone systems use something called extension numbers, which assigns each user with their own short dial code.

Using extension numbers gives your business greater flexibility, for transferring calls between users, keeping calls on hold, hunt groups and many more.

Traditional telephone systems relied on the ISDN (integrated services digital network), which uses copper cables to carry your businesses calls. However, with the ISDN being switched off in 2025, many small businesses are choosing to move away from ISDN, towards cloud-based telephone systems.

The Different Types Of Business Telephone System

There are three main types of telephone systems that your small business might come across. They are:

1. Cloud-based hosted telephone system

Cloud-based telephone systems, often referred to as ‘fully hosted’ or ‘cloud PBXs’ are software-based phone systems that use the cloud to control your telephone calls.

With little-to-no on-site hardware required, a cloud PBX is often the best solution for small businesses and SMEs. They come with low rollout costs, low maintenance costs and high flexibility. Cloud telephone systems are what we would usually recommend to small businesses looking to upgrade.

Cloud Phone System Diagram
Cloud Phone System Diagram

2. On-premise PBX telephone system

An on-premise solution uses physical hardware situated on your office or business premises. This hardware takes incoming telephone lines, and connect them with your employees. 

On-premise telephone systems are quite old fashioned and outdated, as most modern business opt for the cloud-based alternative to save money on rollout and maintenance costs.

On-premise PBX Diagram
On-Premise PBX Diagram

3. Self-hosted telephone systems

A self-hosted phone system is a happy medium between fully cloud-based and on-premise solutions. These telephone systems are software based, and are hosted on a server or dedicated PC in your office.

While they do have their place, and offer increased reliability, we would normally recommend these to business who already have existing server infrastructure, as the rollout cost of a server can be expensive.

Self hosted telephone system diagram
Self Hosted Telephone System Diagram

Examples of a Small Business Telephone System

An example of a common telephone system is 3CX. 3CX is a software based telephone system that businesses across the UK use to run their telephony. A 3CX phone system uses a technology called VoIP (Voice Over IP) to control your calls.

This makes better use of your businesses existing broadband connection, by using it for both calls and data traffic. Using a VoIP phone system such a 3CX can save your small businesses an average of 68% on your running costs.

What is VoIP?

Voice over IP, most commonly referred to as VoIP, is a method for making telephone calls over an internet connection. VoIP sends packets of voice data over an IP network, most commonly over the internet.

VoIP is a significantly cheaper option than traditional telephone lines, as it reduces or removes lots of your small businesses running costs, such as:

  • Multiple telephone line costs
  • Call minute charges
  • International calls

VoIP is the direct replacement for the ISDN, which a lot of businesses are still using. With small businesses having such reliance on their telephony, creating a future proof setup is important. As such, most businesses are turning to VoIP telephone systems, such ad 3CX, for their telephony.

What is SIP?

If you’re shopping around for a new telephone system for your small business, a term you might have come across is “SIP” or “SIP Trunks”.

SIP stands for Session Initiation Protocol, and is the standard that is used by most VoIP telephone systems. 

Traditionally, a small business would have multiple telephone lines, each carrying one call at any one time. Each of these lines all have their own associated cost and line rental.

However, small businesses using SIP can reduce these telephone lines, using their businesses existing broadband connection to carry calls. This is called SIP Trunking. With fewer telephone lines, you can reduce your line rental charges.

SIP Trunks are essentially an alternative to traditional ISDN or analogue telephone lines. Each SIP trunk runs over your broadband connection, and you can add multiple channels (lines) within each trunk to your broadband.

What do I Need to Setup a Phone System?

Setting up a new telephone system for your small business, or upgrading your existing system, is a daunting task. There are lots of different technologies to consider, from the aforementioned VoIP and SIP, to home and remote working or desk phones.

Every small business is different, and there is no ‘plug and play’ solution that fits all variations and sizes—however, a list of things you might need to setup a telephone system at your small business are:

  • Deskphones (whether you have existing desk phones or require new ones)
  • A fibre broadband connection (or a connection strong to sustain SIP trunks)
  • Cabling or WiFi capabilities to connect devices to your system
  • A list of your requirements (which will help you better understand the system that you need)

This is by no means an exhaustive list, and it will change based on your exact requirements. For example, some small businesses are choosing to move away from desk phones, and instead provide their team with soft phone or mobile apps—allowing them to work from anywhere.

So many small businesses have already made the switch to a VoIP or cloud telephone system. A recent study shows 61% of businesses have upgraded to IP communications, saving themselves money and preparing for the ISDN switch off.

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How Much Does it Cost to Upgrade my Business Phone System?

Ahh yes, the big one. How much does it cost to upgrade your small businesses telephone system? Well, the honest answer is we don’t know. Every small business is different, 

As a guide, we would recommend a budget of between £10 and £20 per user per month. Obviously, this is just a guide price, as some telephone systems, such as 3CX, don’t even use a user-based pricing model

Phone System Cost Comparison
Phone System Cost Comparison

We work with hundreds of small businesses that upgrade their telephone systems, and we know how important cost saving is. By budgeting around £10 to £20 per user, you can account for almost everything. 

A great way to save costs is to reuse existing hardware. Your desk phones may well be compatible with new VoIP technologies, meaning that you don’t have to worry about the purchase of new desk phones. Speak to a member of our technical team to find out if your hardware is compatible.

Moving to a new telephone system, especially one that uses VoIP technology, could save your business up to 75% against traditional telephone systems that use ISDN or analogue technology. 

Why Does a Small Business Need a Telephone System?

For many small businesses, having a telephone that rings is enough. As long as customers have a number to call, then they’re happy.

But often something that is overlooked is the over-the-phone experience that is given to your customers and prospects. By upgrading your small business telephone system, you could benefit from seamless call transferring to music on hold, high resolution voice calling and more—helping provide a better experience to callers.

Studies show that 52% of consumers have made an additional purchase from a company after a positive customer service experience. And that, despite the move to online-first communication, 66% of consumers use at least three different channels for communication.

With more businesses utilising home working, your telephone system need to be versatile, reliable and flexible enough to deal with these changing needs.

3CX Softphone
The 3CX Softphone is Perfect for Home Working

With features such as video conferencing, online meetings, collaborations, call centres and more—modern telephony solutions cover all bases, and give you more to play with than just a telephone that ring.

Another reason why your small business might need a telephone system include…

Multiple simultaneous calls

Picture a scenario where your business has one or two telephone lines, and both are in use as you’re on a call. Then a prospect, which could potentially be your largest customer, calls up, but cannot get through.

How much would it cost your business to miss this call? 

A scenario like this highlights the potential cost of not having a good telephone system, where your small business can ensure that callers can always reach you, and eliminate call drop off.

Transferring and call controls

Being able to seamlessly transfer calls to colleagues and team members is an underrated feature of a business telephone system.

Keeping callers on the line, preventing the dreaded drop-offs and offering them a good call experience keeps your customers happy, and makes your business look professional. Push-button transferring also reduces the time it takes for your team to manually type in their transfer destination, improving time management.

Giving a professional impression

When a prospect calls your business, it is important to present a professional, reassuring image.

A great way to give callers a good impression is by offering a welcome message, call groupings and direct dialling. 

With IVR menus, auto attendants, automatic night modes, music on hold and more, you can give callers the best impression of your business.

Home or remote working

A growing trend is home and remote working, and hundreds of businesses have already made the move to full-time home working—removing the costs associated with running an office. Having the right phone system to allow your users to work from home (or in the office) is a must. Different telephone systems offer different home working features—from softphones to WiFi calls and more.

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How to Choose the Right Telephone System for Your Business

A telephone system is an important asset for your small business, and making the right decision is of the upmost importance.

A few things to consider when making the big decision about your telephone system are:

1. How many users do you require?

Consider how many users you might need, typically most businesses might have one user per office employee. But if you have a warehouse that needs a phone, or perhaps remote users or on-the-road engineers or sales staff, they may also need to be a user.

Having a rough user total is a great start to choosing the right phone system, as the number of users will impact on the type of system you require (for example, a school with lots of users may find an on-premise solution more cost effective).

2. What is each user doing (home working/office based etc)

A good second step, once you know how many users you might need, is to think about what each user is actually doing. For example, your desk-based office team are more likely to require a desk phone.

Small Business Telephone System
Each user may need a different device depending on what they're doing

However, guys on the road may be better suited with mobile apps on their smartphones, and those working from home may prefer a desktop soft phone app on their computer.

3. What features do you rely on from your current telephone system?

Now we’ve got the users sorted, the next step is working out what you actually need from your telephone system. Looking at your existing setup, examine what features you use the most, how do they fit into your everyday workflow etc? Maybe you have a click-to-dial setup, or voicemail-to-email?

Another great way to find out the features most important is to ask your team. Ask them what they use the most, find the most popular answers and then put together a more detailed list. When you do upgrade, having a system with features better suited to your team will improve their workflow and increase productivity.

4. What features do you not have at the moment that you would like?

Fourth on the list is to find out what features you’re missing. Do you have any gripes with your current setup? Maybe you struggle to keep in touch with your team when you’re out on the road?

We speak with many business owners that often don’t know what they’re missing until they have it! For example, CRM integration that pops the customer record when they call. Or just the ability to pull calls from your desk phone to your mobile phone if you have to leave the office.

Small Business Phone System Features
Features of a Small Business Phone System

5. Do you plan to grow and add extra users?

Step five is a big one—growth. As your small business grows, you’ll want a telephone system that grows too. Something to think about is your plans for the coming 2/3 years.

Do you have an expansion planned? Maybe you’re taking on more home workers? Or adding additional users to your customer service team? Even just one or two members of staff can make a difference. All of these factors may impact the decision you make. After all, you want to choose a telephone system that meets not just your current; but also your future requirements.

6. Think about your telephony budget

It’s a boring one, but a necessary one. When upgrading your telephone system, you should consider your budget. How much do you have to spend on telephony? What do you spend at the moment?

The budget you have will alter what solution might be best for your small business. We know how finances can be tight, and our team always balance functionality and features with budget—to ensure you get the most from your money.

In fact, upgrading may surprise you. Some of our customers are seeing up to 75% decrease in their telecom costs when they move to more modern technologies such as VoIP and SIP.

7. What cabling or exciting telephone infrastructure do you have in place?

Finally, you might want to take a look at what existing telephony infrastructure. The ‘nitty-gritty’ if you like. This is a particularly important step for small businesses with their own office premises.

What cabling do you have? What equipment have you got? Do you have a comms cabinet? Do you have data points or POE? If you’re not sure on these questions, get in touch with our team and our engineers can organise an on-site survey of your existing equipment. 

Once you have a picture built up, you can decide which option might be best, or speak to a member of our team and let them find the right option for your business—whether that’s self hosted, cloud based or hybrid.

What are the Benefits of a Small Business Phone System?

When you have the right telephone system in place, your small business could see return on your investment right off the bat, with extra features making your life easier than ever.

1. Increasing revenue

With a professional telephone system in place, your small business can optimise. From collaboration and inter-team meetings, to working from home and cold calling.

With these small optimisations in place, your sales team can reach people more quickly, cut down on time spent searching the CRM by utilising software integration, and overall optimise your processes to help increase revenue. 

2. Giving customers exceptional over the phone service

We’ve said it before and we’ll say it again, giving customers the best service over-the-phone is absolutely vital. Even if you’re just catching up wit your customers, ensuring they have a high definition, reliable call goes a long way. 

Another way to improve their experience is to provide an effortless transfer and queuing process to callers. Giving them a professional impression and cutting down on call wait times vs your competitors.

3. Flexible working

An increasingly popular feature of small business telephone systems is soft phones and home working applications. Flexible working is becoming the standard for businesses across the UK, and keeping your telecoms ahead of the curve is important.

With newer, cloud-based and VoIP phone systems, your small business can provide a reliable platform for home and remote workers. With soft phone apps for smartphones, Macs and PCs, your team call make and receive calls from anywhere.

Small Business Telephone Systems — The FAQ

Here’s a few of our most frequently asked questions about phone systems.

Can you install a system?

Yes, as part of our solution, we offer on-site engineering installation of your new business telephone system. Our expertly trained engineers are on hand to ensure your changeover goes smoothly.

What is the difference between a telephone system and a landline?

Some smaller businesses use a single line as their main form of communication. While this might work for those with one or two employees, a fully featured phone system allows you to transfer calls, provide callers a more professional experience.

Can I customise my telephone system?

In short, yes you can. Every business is different, and therefore no two phone systems are the same. There is no format for ‘plug-and-play’, and most small businesses require a unique setup for their phone system—giving them freedom to control call flow and optimise for their workflow.

Can I get some help with my phone system?

Not sure where to go from here? Speak to a member of our team for honest, no obligation review of your existing telephony solution, and to find out more about how your small business can benefit from a new telephone system.

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