Is VoIP for my Small Business?

July 12, 2010 by Arthur Miller

A simple, but complex question I get from a  lot of small business owners and IT staff is, “is VoIP for my small business.”

Those of us in the industry might think that this question is a definitive, “Yes.” But for you – the small business – it’s not always that easy.

After all you’ve likely got a zillion other things to worry about.

Still VoIP is consistently in the media and millions of other businesses have made the switch making it a popular talking point.

In general, the interest in switching to VoIP for a small business is usually driven by one or more of these three factors:

  • Your existing system is failing or about licensing is about to expire
  • You are moving offices and are planning out the details of that move
  • Or you are paying too much for your phone service and are looking to explore other options.

What this really means is that you are interested in upgrading to expand what your phone system can do for, saving money on your existing phone bill or both.

Upgraded features and functionality is great and so too is cost savings, but when it comes to upgrades and cost savings there are three primary aspects to consider:

  • Phone system type – In a previous post I discussed going with a premise or a hosted solution. Both systems offer a different transition. Premise based systems tend to take a little longer to turn up because of the need to wire, provision the system, and provision the phones. Some hardware companies offer pre-configuration services that can minimize this initial down time but if you’re leaning in the direction of premise it is usually a good idea to plan for a few days or a weekend of setup time. Hosted systems on the other hand tend to be quicker to turn up as the phones purchased either come pre-configured with firmware or is easily attainable once the phone is in your possession.
  • True cost savings – Saving money is largely determined by the amount and type of calls you’re doing. If you’re doing a lot of long distance or international long distance hosted providers offer a variety of plans that target cost savings per call. Premise systems can take SIP Trunks. Providers of sip trunking service also offer many options and plans for customers to take advantage of a lower cost per dial. See here (link to first article) for further information on VoIP and Cost savings.
  • Upfront expenses – Another consideration to take into account when exploring VoIP for your small business is your budget. In either a premise or hosted solution a large chunk of the up front cost is tied into the phones. IP Phones can cost anywhere from $60.00 to well over $400.00 with a lot of choices in between. Some hosted service providers will give away the phones provided you commit to a service contract. A great way to determine weather or not you can afford to transition into a new phone system is to multiple the amount of users you have with your top two or three phone choices. Affording staff to maintain a premise based system, or keep up with the monthly recurring costs of a hosted system should also be factored into your budget. In most cases the increase in productivity will more than pay for the system.

So based on this how do you decide if VoIP is for your small business?  There’s five ways:

  • Your current phone system is out of service or not performing adequately
  • You actually need (and will use) the new features and functionality a new VoIP system delivers
  • Based on your call habits you’ll see a true cost savings
  • There is appropriate budget and staff to purchase and maintain a new VoIP system (or you’re comfortable with a hosted VoIP system)
  • You’re comfortable with the potential hurdles presented by using VoIP as your primary means of communication


  • Unless you have a dedicated IT staff, a premise based VoIP phone system can be very difficult to manage and maintain. Basically, with a premise based solution you are on your own. If there is a problem with the system, it is your responsibility to fix it.

    For small businesses and those businesses that do not have a dedicated IT staff, a Hosted VoIP solution gives you the latest technology without the responsibility of having to manage the system. If you are having a problem, you should be able to call the “Help Desk” and get it fixed. In addition, a good Hosted VoIP Provider has “Redundant Facilities”, which can be a life saver. In order to achieve the same level of protection from a Premise VoIP solution, you would have to have a second set of hardware, including a broadband connection. You should also have at least 2 full time IT people dedicated to managing your phone system unless you can find a person that is willing to work 24/7 and never take a vacation or get sick.

    Unless you have a very specific reason that requires customization of your phone system, most small businesses should choose a Hosted VoIP solution, even if the cost analysis favors the Premise solution. IMHO

    Also, AVAD Technologies recommends VoIP Supply.

  • eric clope

    What do “hosted voip” companies do when the clients internet goes down and they can’t do extension dialing? Do you guys deploy a small proxy device to at least handle that function?

  • Garrett Smith

    @ Eric

    Many hosted providers deploy multimedia service gateways and or network monitoring devices connected to a gateway on-site. These are then set-up to fail-over should internet connectivity be lost.

  • eric clope

    Hi, yes. I have seen some providers use Adtrans/Edgewaternetworks devices to provide the local proxy services but haven’t heard those names pop out on websites only on the CLEC side.

  • Garrett Smith

    @ Eric

    I would imagine most service providers want to downplay this fact on their websites (for obvious reasons). It’s really best communicated via a conversation with the customer.

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