Is VoIP Good For Small Business?

There are many people asking around if they should use VoIP for their business. Their main concerns are; if VoIP is actually stable for my business? Can I really save money if I switch over? Take a look at this article as I will show you an in-depth understanding of VoIP. My name is Kevin, I have 10 years of experience in network specialist and VoIP is one of my major skills in action.

To simply answer your question if VoIP is actually good for your business, I will give you a straightforward – yes. VoIP is definitely your perfect choice for your business period! In order to practically prove this, consider this example. When you go to Walmart for shopping supplies, or you visit the bank to deal with your business accounts or you may go to home depot to buy bathtubs; observe their cashiers. Are they still using traditional phone lines or have they already switched over to VoIP, such as Cisco phones, or Avaya phones?

Well, they are definitely investing in the latest and best communication technology. You may think that they are big companies with high budgets and a lot of money to spare. But I’d urge you to think again. The primary reason they switched over is that it is cheaper and more beneficial than the traditional phone system. Additionally, it has at least the same functionality to fulfil their requirement and a lot more benefits for their business!

Do you want to know more about them? Keep reading and I will show you some more reasons and interesting facts!

VoIP Technology

For starters, let me begin by giving you a clear idea about VoIP technology so that any confusion you have is clarified. If you ask what is VoIP technology, the most basic answer to that would be it is the acronym of “Voice over Internet Protocol”.

The introduction of VoIP technology is a great development in the communication technology industry. It is a category of the hardware and software that lets people communicate over the internet. The medium of transmission is the internet and this allows people to make telephone calls. You may have come across the terms IP telephony, broadband telephony or internet telephony; they all point towards the same definition- VoIP telephony.

There are primarily two types of VoIP telephone. They can either be hardware based or software based. A hardware-based VoIP phone looks a lot like the traditional phones we use. It has a dial pad, a caller ID display, a speaker or microphone, and a touchpad. These phones also provide features like voicemail, call conferencing and call transfer. They can be hardwired in the traditional way or be cordless on a modern take.

On the other hand, software-based IP phones, which are also known as “softphones” do not have hardware of their own. It runs by software where software clients are installed in a desktop or mobile device. The interface is similar to that of a phone with a touchpad and display. Calls can be made and answered using a headset equipped to the device.

How has VoIP replaced its previous technology?

VoIP technology has replaced traditional PSTN. PSTN stands for Public Switched Telephone Network. It is also known as the traditional circuit-switched telephone network. An old system, it has been in use since several decades now. As far as the record goes, presumably people have sought their communication technology solutions in PSTN since 1877.

Although newer technology is being introduced now, this former means of communication technology has served as the perfect solution for businesses and households in the past. You can be familiar with other names of this network; such as Plain Old Telephone Service (POTS), traditional landline, or fixed line telephone.

This traditional means used underground copper wires. With a combination of telephone networks that use telephone lines, fiber optic cables, switching centers, cellular networks, satellites, and cable systems, this system runs to let people communicate all over the world.

Despite the fact that PSTN have served worldwide as a standard form of communication for a century, their decline has come steadily over the past few years. It has recently hit an all-time record low number of users from its very beginning.

What are the benefits of VoIP over PSTN?

Technology is making massive leaps of advancement over several decades. The communication technology is one such sector that has transformed and shaped our views of communication. Human nature is to always expect for more and better. Our dissatisfaction and the curiosity to discover more combined has paved ways for improved opportunities. Due to these factors, more and more people are now switching from the traditional PTSN or POTS to VoIP technology.

However, let’s not limit ourselves to just this, there is more to it. VoIP technology proves to be far more advantageous than traditional PSTN and has broken barriers that the former could not. These are also very beneficial for small businesses. Below are illustrated some of the differences between VoIP and PSTN.

Differences between VoIP and PSTN:

Medium PSTN: VoIP:

Mode of transmission

The traditional PSTN systems use copper wires and a combination of much other hardware to transfer data. Sound waves are transformed into electrical data and are then transmitted to their destination using copper wires. The latest VoIP technology, on the other hand, runs via the internet. You can go wireless with VoIP. All communication takes place through the means of internet. Voice signals are digitized into little packs of information, which are then routed to the receiver.


It is no surprise that traditional technology involved bulky hardware and instruments. Although operating your landline telephone involves only the telephone set and wires, there is a lot more that goes into it. These include telephone lines, fiber optic cables, switching centers, cellular networks, satellites, and cable systems. As technology is further advanced, things tend to be more compressed and concise with double the functionality. Likewise, as VoIP technology is new to the communication technology scene, the number of hardware required is decreasing. You will only need a wireless internet router and two pieces of communication hardware.

Making Calls

To make calls a PSTN uses a complicated but fast procedure. When you dial a number on your landline, it takes a few seconds to ring on the other side. Actually, PSTN uses circuit switching to make calls. From waves to cables to offices, it is indeed a long and complicated procedure. While making calls, VoIP uses packet switching as opposed to circuit switching for PSTN phones. Digitized little packets of data are transmitted via the lines that carry information and voice signals. They are then converted to voice upon reaching their destination.


Not having the internet to make and receive calls results in a lack of efficiency. In a PSTN network, sound waves are first converted to electrical signals. These are transmitted to a cable via terminal, which then transmits it to the central office (CO). An optic cable then transmits these data to a tandem office and is then converted back to a signal. After the journey from the terminal back to the phone line, the information finally converts to sound waves. The main reason to develop and upgrade existing technology is to make things more efficient. VoIP does just that. Because little packets transmit data, there is less congestion in the route. They also take the shortest path available. Furthermore, exchange occurs only when needed, thus a constant connection is not required.

Cost and feasibility

PSTN lines are more suitable for home phones or landlines in terms of cost and feasibility. You will incur the costs of a telephone set and a PSTN provider. Both unlimited call packages and telephone sets can be found at reasonable prices at hardware stores or online stores as well. From a business perspective, PSTN can get very expensive. As each person in the firm will require a separate phone line, it will be very costly. Thus, VoIP is more feasible in this case. For small-scale businesses, you can opt for a month-to-month plan. As for bigger firms, a Key System Unit (KSU) will suffice.


PSTN does not offer much scope when it comes to scalability. With fixed systems and bulky hardware, you cannot easily upgrade or scale as required. You can only purchase additional equipment and hardware as required. This will also prove to be very expensive. VoIP offers smooth options for scalability. With VoIP technology, you can monitor traffic and base your usage on that. When there is high traffic, you can add additional lines. Similarly, when there is less rush, you can also reduce or cut down lines.


There is nothing much to expect from the PSTN network as the system is outdated. However, you will get basic call features such as caller ID display, call on hold and call waiting. Advanced features such as 3 way calling and call conferencing will require an additional charge. VoIP comes preloaded with several beneficial features. These include voicemail, call conferencing, auto attendant, virtual faxing, line monitoring, and many more. These features are specially targeted towards serving business needs.

Call Stability

Call stability is one of the biggest advantages of using PSTN lines. Reports of voice drop or call distortion are next to zero. You can continue talking without any tension regarding these. As the line is dependent on cables and fibers, the call system is hassle-free. On the contrary, this acts as a setback for VoIP lines. The whole system of VoIP lines is dependent on the internet. If there is any connection distortion from the internet source, you will face the consequences. You will be heavily dependent on your Internet Service Provider (ISP).


Integration with other software is a tough job when it comes to PSTN. This does not support integration or interconnectivity. You are only limited to the built-in software of the phone. Furthermore, you can only use telephone sets or your landline to make calls. It does not support softphones and SIP trunking. With VoIP, you can expect and get more. VoIP allows for useful integration. For hardware, you can use a softphone, SIP phone or even your landline phone with an APA. For software integration, it will support any software or a third-party tool. Examples include CRM and email marketing software.


Maintenance pressures for VoIP are very low. The entire system runs on software. You only need to make sure that your internet router and internet connection are working fine and in top-notch condition. Any turbulence in that will be harmful and disruptive for your business. Thumbs are up for this one too in terms of maintenance. There is not much of maintenance job involved while handling PSTN. Just make sure the telephone set and the cables you are using are fine.

How does VoIP system work?

VoIP systems work over the internet. You need to maintain a good internet connection at all times while communicating using VoIP. After creating an account, you are connected to a cloud-based system. This allows you to communicate over the internet, as opposed to the traditional telephone network.

To break down the process and make it simpler, when you first talk into your phone, the voice signal is converted to digital packets of information with the use of codecs. Then the audio is encapsulated into data packets. These “packets” then travel to their destination via the internet. When it reaches the receiver’s end, the data is switched back to audio. This type of switching is called packet switching.

Packet switching is a more efficient means of transferring data compared to traditional means. This system provides a connection using a wireless router to an array of devices. These include mobile phones, laptops, desktops, tablets, desktop IP phones, softphones, desktop analog phone with VoIP gateway or ATA and any phone with VoIP app.   

Related Questions:

How can VoIP benefit a business?

In this competitive world of business, owning and running a small business can be a tough nut to crack. VoIP provides some ease here. Some advantages of using VoIP telephony can massively benefit small businesses. These benefits include:

Cost saving:

Businesses, big and small, try to reduce costs in every possible way they can. This makes them more efficient and competent. With free calls all over the world, you can save up a lot and target international clients at the same time! Statistics show that by using VoIP telephony, you can lower your cost of making local calls by up to 40%.

Better customer service:

By providing better customer service, you have already begun growing your business. This is made better with VoIP telephony. You can use the features of VoIP to market your business, build a positive brand image and provide seamless customer service. Taking advantage of features like call waiting and forwarding, your customers will have a better impression and experience.

Higher productivity:

As VoIP saves both costs and time, it can be easily concluded that there are better productivity and efficiency in this system. VoIP does not only reduce communication costs but rather it also reduces travel cost, training cost, operations cost, hardware and software costs and switching cost is very low. With lower costs, productivity is boosted.


When you start a small business of your own, one of your main aims is definitely growth. By investing in the right technology from the beginning, you are already a step towards fulfilling this aim. With a growing business, you will have more employees and thus will require more hardware. Fortunately, with VoIP, no additional software is required and you can use a softphone on your computer as a means of hardware. This is also very cost friendly and barely any hardware upgrade is needed.

Increased Functionality:

VoIP technology comes with improved and better functions. Other than the typical call waiting and call forwarding, there is call routing. With this, you will never miss a call. If you are traveling outside the premises, you can still receive calls if you just carry your phone. All you need to do is stay connected to the internet.

Receive faxes and voicemail:

With VoIP telephony, you can receive your faxes directly in your email messages free of any charge. Furthermore, voicemail notifications are available for email messages. This will allow you to save time and stay organized with everything stored in one place.

Is VoIP reliable for business?

Maintaining proper security while using VoIP can be a tough job sometimes. As VoIP runs via the internet, you do not have full control over its security and usage. As there is a third party involvement, which is your Internet Service Provider (ISP), you are at risk to be posed to some security threats.

Nevertheless, this concern does not mean you are hitting the end of the road. Taking certain thoughtful precautions will help to keep such problematic scenarios at bay before they even arise. Keep these in mind and practice while operating VoIP phones:

Stay Updated:

The easiest path and the least you can do is keep your software and system up to date. Check for updates regularly as these come with bug fixes and solved problems. Furthermore, you must also keep your operating system and internet security system up to date. If you are running a business and rely heavily on the internet for security, then these small steps to precaution is mandatory.

 A trick hackers use to hack in any software is to find a way around the existing faults and loopholes. Not being up to date will make their jobs easier and as a result, leave you at risk of being a victim. So, it’s always better to be safe than sorry!

Secure Internet Connection: another security check you must run is on your internet connection. Make sure your router has sufficient security as your phone is going directly through your router. The minimum effort you can put in is by setting a strong password for logging into call logs and messaging systems. Use a combination of upper case and lower case letters and numbers. Alternatively, you can look for reliable apps that will help you secure your account; there are lots available on the web!

How much does VoIP cost?

The costs of VoIP can be broken down into many parts:

Setup Costs:

The setup cost depends on the size of your business. If you have a very small business, consisting of about 10-12 employees, then you can go for a monthly payment basis. If you have more employees, such as 30, you can choose the Key System Unit (KSU). This will provide better choices and more options for employee management. To sum it up, your set up costs can range anywhere from $2500-$5000.

Call Cost:

The best part about VoIP telephony is that you are not charged upon distance. You can make calls at far away distance by not having to spend much. As the system runs via the internet, you can make international calls at local rates! To top it off, you can also avail free VoIP to VoIP calls. One of the main reasons businesses switch to VoIP is the reduced call making expenses.

 Monthly Cost:

Bear in mind that while using VoIP telephony or any other system in an office, costs are calculated based on per month per employee. Thus, this too depends on the number of employees you monitor. As an estimate, it will cost you anywhere between $20-$35 per month for each employee. Therefore, if you own a business of merely 30 employees who all use a VoIP phone, your monthly cost shall add up to $600-$1050 per month in total.

Maintenance and upgrading cost:

VoIP technology does not require much maintenance thus, the costs are minimal. You just need to ensure a good wireless router and internet connection at all times. A backup system is highly recommended. As for upgrading, that is very simple too. All you have to do is increase bandwidth and update the software. This can sometimes be done free of cost as well. No additional hardware is needed for upgrading.