VoIP Phone Services for Small Business: How They Work and Who needs one

Many organizations are adopting VoIP phone services because they are quicker and simpler to install as well as easier to use than traditional phone systems. VoIP is also practical for small businesses since you can operate it immediately without the need to replace your existing hardware.

In this article, we will cover everything about VoIP phone services. What are they, how do VoIP Phones work, can they be used as a regular phone, and are they good for small businesses?

Let’s find out!

VoIP explained

Also known as internet telephony, the Voice over Internet Protocol technology transmits voice and other forms of multimedia to a recipient through the internet. 

A company that offers VoIP solutions to commercial and residential customers at a monthly or annual rate is called an internet phone service provider or, more commonly, a VoIP service provider. The solutions are mainly in the form of bandwidth connection, hardware, and maintenance, or after-sales services. 

Most industries that depend on communication services, such as contact centers and call centers take advantage of VoIP technology primarily due to its cost-effectiveness. However, since this technology is also for video calls and video conferencing, which permit participants to view and talk with each other, such added features are additional attractions. 

Small and medium-sized enterprises (SMEs) have been using VoIP platforms not only because they are more affordable than the other available systems on the market (such as on-premise PBX) but also for their flexibility and scalability.

If you’re a small business owner or working from home, you can set up a two-line phone system at a cheaper cost when using VoIP technology. This system, as suggested above, offers more features than a conventional phone service. 

What are business VoIP phone services?

Business VoIP generally pertains to a phone system that sends to and receives calls from multiple callers over the internet. Until about 25 years ago, phone calls were made through the Public Switched Telephone Network (PSTN) with switches and copper wiring. With the introduction of VoIP in the early 1990s, phone calls could be connected via the internet.  These calls were first carried out using desktop computers.  Later on, other devices, such as laptops, smartphones, tablets, and softphones were VoIP enabled. 

As years passed, business VoIP phone services significantly progressed and hardware was no longer needed to operate them. The demand for these services has dramatically grown as more large businesses joined SMEs to look for more affordable and efficient communication services. 

According to Persistence Market Research, a New York-based market research firm, global VoIP services are expected to grow, reaching almost $195 billion in revenue by the end of 2024. Companies promoting the system of Bring Your Own Device (BYOD) and VoIP service providers introducing new features for potential and current customers are the main reasons for the substantial growth. 

Local and long-distance voice, as well as video conferencing and fax services, are what VoIP business phones services provide. Using the IP network for calls rather than a separate connection enables these services to enhance an organization’s external and internal communications. Regular phone lines, which are typically expensive to acquire, are not required for VoIP-based phone services to work. 

What are the main features of business VoIP phone services? 

A VoIP service for business provides your organization with features and benefits that are similar to traditional phone service, It also offers features such as auto-attendant, direct inward dialing, advanced calling, ring groups, dial-by-name directory, and more. 

Additionally, business VoIP providers offer mobility, messaging features, collaboration, application integration, social media, and collaboration. Employees, customers, clients, and suppliers will benefit from these functions, facilitating communication anytime and anywhere. 

Moreover, a business VoIP phone service allows you to migrate to a cloud-based system that permits the phone service provider to manage your network, including the functionality and technology upgrades or updates. 

Business VoIP service also covers unified communication, sessions initiation protocol (SIP) trunking, and hosted private branch exchange (PBX) or cloud PBX. 

What are VoIP phones?

Business VoIP works best with internet protocol phones or IP phones for short. The VoIP phone could be a desktop, laptop, web browser, softphone, tablet, smartphone, or any mobile device. 

An article on the business technology website SearchUnifiedCommunications defines a VoIP phone as hardware or software-based phone built to make and receive voice calls over an IP network via the internet. This device or application digitizes the audio format from analog before it is sent through the internet. Then it converts incoming digital signals to standard telephone audio. All of these conversions take place instantaneously.

VoIP phones consist of capabilities and functions that conventional analog phones lack. They also need fewer requirements since phone calls are conducted through the internet rather than through the standard PSTN.  

Two Types of VoIP phones

Numerous IP phones are available on the market. But many service providers, including hosted VoIP ones, provide two primary phone types: a software-based and a hardware-based phone. 

Softphones

Otherwise known as a softphone, a software-based IP phone is virtual phone software set on a device. Its interface typically looks like that of a phone handset that comes with a caller ID display and a touchpad. To start making calls, you either need a headset with a microphone that can be attached to your gadget or a built-in microphone device. 

Softphones have basic features, such as call transfer, call conferencing, and voicemail.  They can also carry extra services, including instant messaging and video conferencing. 

Hardware-based VoIP Phone

A hardware-based VoIP phone is similar to a regular cordless telephone. It contains physical features, including a touchpad, a caller ID display, a microphone, or a speakerphone. Aside from these, this device offers advanced features, such as multiparty calling, support for different VoIP accounts, call transfer, and video phones that make it possible for callers to view each other. 

Kinds of hardware-based VoIP phones

The Zoom website lists commonly used hardware-enabled VoIP phones. Among them:

• • Standard desktop phones. They appear to be and perform in the same way as traditional office phones. Most feature LCD screens showing important information, including caller ID. The latest models consist of full-color touchscreens for enhanced productivity and can manage multiple unique phone lines. Some offer Bluetooth technology for wireless headsets.
  • USB phones. These easy-to-use and affordable devices connect straight into a computer through a USB port. They are ideal for small business and home office users. These gadgets do not offer LCD screens or sophisticated features and handle calls through the computers to which they are connected. USB phones are typically used with softphones. 
  • Conference phones. Built to boost sound quality during conference calls, these have multiple microphones. Each microphone is electronically stabilized to enhance call clarity. These devices are frequently shaped like the letter V or Y, with two or three separate speakers. The speakers are digitally balanced to make sure the voices can be heard crystal clear. 
  • Videophones. Similar to regular desktop phones, they provide a USB-based or built-in camera with a larger and full-color screen that is meant for video-calling. However, these devices are not very popular because many users prefer to use video-calling on computers and mobile gadgets. Some industries do still use this type of VoIP phone, however. 

How do VoIP phones work?

In terms of executing a phone call, a VoIP phone works essentially the same as a regular telephone but with some technical differences. 

SearchUnifiedCommunications explains that VoIP phones turn voice calls into digital signals that are sent via IP networks, the most common of which is the internet. A VoIP phone may either run through VoIP-enabled physical phones or as a virtual phone software placed on a computer (desktop or laptop) or a mobile device (smartphone or tablet). 

To activate VoIP phones, you need several networking components so that the Dynamic Host Configuration Protocol (DHCP) can designate IP addresses in the devices. The DHCP automatically configures the network and the VoIP parameters. For the phones to connect to each other, a domain name system is required to take account of the IP addresses.

What are VoIP phone features?

In addition to the main features mentioned above, VoIP phones offer more capabilities, depending on the model and brand. Some of the additional features are online faxing, auto attendant, text messaging, video calling, team chat, mobile, and desktop apps, call analytics, speech-to-text transcription, call recording, call routing, easy conference call access, integration with customer relationship management (CRM), and recordings or logs of calls. 

Some VoIP phones have Bluetooth communication with devices, such as microphones, speakers, handsets, and headsets. 

Moreover, you don’t need special numbers with VoIP phones and you can easily transfer your phone numbers from one provider to another. These phones allow you to select a new vendor without having a new number. 

With VoIP phones, a cloud-based business phone system for small businesses or home offices can be attained. A phone network using cloud technology allows your organization to conduct phone calls, set up conference calls, or send messages and the like from any VoIP-enabled device, whether it be a mobile device or desktop, without the need for additional phones. 

However, a VoIP phone based on a cloud phone system has its pros and cons. Before making a decision to adopt the cloud network, examining the advantages and disadvantages is recommended. It can be beneficial to many but may not necessarily be applicable to your existing business setup. 

How VoIP phones differ from traditional phones

While landlines, cellular phones, and similar traditional phones are dependent on physical wiring to the PSTN infrastructure or cellular sites (towers), VoIP phones are reliant on IP networks, a group of computers linked through distinctive IP addresses.

VoIP phones are not only more affordable than landline phones implemented in the same system but they also provide more functions in addition to voice calls. But their reliance on the internet and other IP networks make them susceptible to cyberattacks and occasional poor connections. 

Business phone system costs are lower when using VoIP phones than mobile phones carried out on a similar level. Smartphones, even the latest ones, are still limited compared to VoIP phones in terms of CRM, software integration, analytics, unified communications, and other enterprise-centered features. 

VoIP Phones: Advantages

The primary advantage of VoIP phones is cost savings. If you’re running an SME and use regular desk phones or similar devices, then shifting to VoIP phones will decrease your costs in the long run. Standard phones have lower initial costs but have high maintenance and upgrading costs. You can save more on international and long-distance calls since VoIP phone calls are charged at a local rate regardless of the call recipient’s location. 

Another benefit of using VoIP phones is integration. When setting up an office phone, integration with other business software is essential to enhance communication and raise productivity. VoIP phones enable companies to incorporate their CRM applications to check analytics and call logs for various sales leads and customers.

VoIP phones provide more flexibility and mobility than standard phones. If you decide to change the business location, getting new phone lines is not necessary. Traditional phones use physical wiring that cannot be carried or moved to be reinstalled at a different site. By contrast, VoIP phones are scalable — the higher the network bandwidth, the more phones you can add to your VoIP platform. Softphones are portable.  You can bring them along with you anywhere, increasing your access to customers or clients. 

VoIP phones allow you to avail your business of the best multi-line phone system for small businesses. A multi-line system allows you to manage more than two calls at the same time. It lets users perform several tasks in a short period of time, such as dialing internal or external numbers, going back to the line, or placing calls on hold. Multi-line networks are equipped with VoIP phones that depend on various data centers for redundancy to ensure workflow is uninterrupted. 

VoIP Phones: Disadvantages

SearchUnifiedCommunications points out that VoIP phone performance can be limited when the internet connection is not reliable. An unstable connection results in bandwidth constraints, leading to latency issues, such as dropped calls, choppy calls, or delays. 

A power interruption will cut off the connection, making your VoIP phones inoperable for a time. Unless you have a backup power supply, you have to wait until the electricity comes back for your phones to again work. Conversely, landlines almost always operate round the clock regardless of the power situation because power companies have their own backup generators solely for landlines. These generators let you keep making calls even in the middle of a power breakdown. 

Another drawback of VoIP phones is the difficulty in making emergency calls. IP addresses do not show the precise caller locations, preventing 911 operators from directing calls from VoIP phones to the proper emergency call center. 

The 911 system is designed for traditional phones, such as landlines, allowing operators to automatically locate the call origin when receiving an emergency call. When using a VoIP phone, the 911 operators cannot pinpoint your exact location and will only receive the address you provided at the time of your phone’s installation.

How are VoIP phones connected?

The internet makes calls with VoIP phones possible. It serves as a channel between your phones and those of the service provider to communicate with each other.  

According to UK-based independent telephony company T2k, VoIP phones are generally connected to a computer network with cables that lead to the communication room or straight to your router. 

Your VoIP phones are activated and linked to the network with a single cable. A networking device called power over ethernet (PoE) switch is required to start the phones. POE switches are ideal for large companies having their own communication room while PoE injectors or adapters are best suited for SMEs or home offices. 

Simply put, a VoIP phone is connected through an ethernet connection to your system of cables, switches and routers called a local area network (LAN), which links to your phone service provider via the internet. 

Nevada-based data communications company PacStates explains that to install a VoIP phone, only one ethernet cable is needed per desktop. VoIP phones include a 10/100/1000 built-in network switch that enables you to connect the ethernet cable from the wall (directly connected to the PoE switch), then set up an ethernet patch cord from your phone port to the computer.

Can VoIP phones be used as regular phones?

Your landline phone is limited in terms of location; it needs a physical connection to make a call. The handset uses a telephone line to contact your recipient. VoIP phones remove the location restriction since calls are made over the World Wide Web. 

Thanks to technological advances, you can use VoIP phones as regular phones without the cost of standard phone lines. You can achieve this with a few simple steps. 

First, get a VoIP adapter. Also known as an Analog Telephone Adapter (ATA), it is a device that links the analog telephone service and the digital network that transmits calls. Prices of VoIP adapters range from $20 to $100 each.

Then connect the adapter to a wireless router or a modem that uses an ethernet cable. Afterward, turn on your computer and read the manual that comes with the adapter. Look for the IP address on the adapter and type it on the computer. Follow the set of instructions on the screen to configure the adapter. After finishing the configuration, plug your standard phone into the VoIP service provider. 

The ATA and the ethernet cable convert your analog phone into a VoIP phone. The analog phone will connect to the internet instead of the traditional PSTN and will show to the phone system as a VoIP phone. 

What is needed for a VoIP phone?

In an article on the website of California-based information technology and services firm Intermedia Cloud Communications, senior marketing communications manager Kirsten Barta says, you need a modem and router for a VoIP phone to function. These are parts of the current internet setup. When you download the IP phone’s calling software, you can make calls from the VoIP phone or from any device.

There are other types of equipment to consider. One is VoIP desktop phones, which are built to work with IP technologies for sending calls. These wireless phones require no outlet to be connected, unlike landline phones. They also have capabilities similar to those of business phones, including call waiting, do not disturb, and conference calling. These devices are easy to set up and your organization can use them immediately at the office or at home if employees work remotely. 

Another type of VoIP gadget to acquire is a VoIP headset. This equipment allows you and your team to talk comfortably without the need to grasp a phone or always depend on external audio from the computer. With a built-microphone, VoIP headsets come in two main types of connections, wired and wireless. The wireless type applies Bluetooth technology to connect in the same manner mobile phones do. 

There is also the other version called the USB VoIP headset, which is a combination of headphones and a microphone. This device needs a USB connector to link to computers or similar gadgets. 

Prices of basic VoIP headsets start at around $20; high-end headsets can go as high as $400 depending on the model, version, and features. 

Conclusion

The affordable cost and convenience of setup are among the main reasons why many SMEs and some large businesses use business VoIP phone service. With the various features and advanced functions, VoIP services offer at reasonable rates, your business can project a first-rate professional image when customers or employees use this communication system. 

Before buying VoIP phones, it is recommended that you select phones that are compatible with any business VoIP phone service. Avoid a VoIP provider that tells you their VoIP phones cannot be used with another provider. Having VoIP phones that work with most, if not all systems will save you much money in the long run. 

Lastly, when looking for the right VoIP provider, consider pricing and plans, collaboration tools, scalability, features, third-party integration, channel support, call management, and custom mobile apps.