What Is a VoIP Phone System? A Guide for Small Business Owners

VoIP (Voice over Internet Protocol) is the best alternative to the old phone system. Traditional phone lines are connected to the hardware in your office, which makes it expensive and hard to scale. You need new wiring for every new line and each time you move, you have to pay new install fees. The bill gets bigger for most small businesses, while the system still functions the same way it did 20 years ago.

VoIP works by running your calls over an internet connection instead of a copper phone line. In this guide, we go into more details on its use, how it compares to a landline, what features come with a business VoIP system, and how to tell if it’s the best move for you.

How Does a VoIP Phone System Work?

A VoIP system works by converting your voice into data, sending it over the internet, and reassembling it on the other end, allowing you to make calls once you have a reliable internet connection.

Once you’ve set it up, your team can answer calls using:

• A desk phone that connects to the internet 
• A softphone app running on a laptop or desktop
• A mobile app on your smartphone 

All three options can be active under the same business number at the same time, and the calls route to whoever is available. An employee can answer a call on the mobile app while a receptionist picks up the same line on a desk phone. The flexibility is the main reason businesses move to a cloud-based business phone service.

VoIP vs Traditional Landline

Let’s look at how the two compare at a glance:

Cost and scalability are usually the deciding factors for small businesses.

VoIP uses a fraction of traditional phone bill costs because you don’t need to buy separate hardware, and most providers bundle voicemail and call routing into the base price.

Before you can add an employee to a landline system, you need to schedule a technician to come to your building, run new wire from the phone company’s nearest connection point to the new desk, install the jack, and wait for the provider to activate the line on their end. The whole process can take many business days, which is not great for scaling.

But with a few clicks, you can add a new line on VoIP in minutes. Anything you need, from closing a location to hiring a new employee, can be done quickly through a dashboard.

What Features Come with a Business VoIP System?

A business VoIP system includes more features than basic voice calls which help businesses save money: 

• Call Routing and Auto-attendant: Automatically directs callers to the right team using self-service options without needing the front desk to pick up.
• Voicemail to Email or Text: Transcribes voicemails and sends them to your inbox, which is great for following up with leads.
• Mobile App: Allows staff to answer the business line on personal phones, but the caller only sees the business number.
• Location Management: If you work across locations, every site runs on the same system, and the setup is managed from one place.
• Call Analytics and Recording: You can track call volume, missed calls, peak hours, and average wait times. You can also review recordings for training or use them to resolve customer complaints.

The right features depend on what your customers do when they call you. For instance, a restaurant with many locations needs call routing so they don’t miss reservations during a dinner rush. A medical office also needs voicemail transcription to quickly see and respond to urgent patient messages. 

Is a VoIP Phone System Reliable Enough for a Business?

The question many people ask about VoIP is: what happens if the internet goes down?

Luckily, modern systems are built to solve this problem. Managed VoIP services monitor the connection 24/7 to proactively catch any issues before they affect the business. If the primary internet fails, calls automatically reroute to a backup internet connection in seconds. Setup can also have reroutes to business mobile phones or to staff cell phones. 

So, before signing with any VoIP provider, ask three questions: 

1. What’s the uptime guarantee? 
2. Is failover added by default? 
3. What happens to calls during an outage?

If you want to have a strong and informed perspective before making enquiries, check the FCC’s consumer guide to VoIP for what uptime standards providers should meet. 

Who Should Switch to VoIP?

You’re a good candidate if:

You manage multiple locations 

A unified phone system across all sites means consistent service for customers and a streamlined payment plan.

You use different vendors for internet and phone services 

Combining plans under one provider drops the total cost and gives you one number to call to resolve problems.

You lose money when you miss calls 

VoIP’s call routing and mobile features stop restaurants, retail, home services or any other business running on reservations or appointments from losing revenue when calls go to voicemail. 

Your team works in different locations 

Staff at home, on the road, or across other areas can all use the same business number from any device.

Should You Switch to a VoIP Phone System?

A single location business with two employees and a $40 landline probably doesn’t need to switch tomorrow. But if your call volume is growing and you need features a landline can’t give you, then VoIP will end up costing you less, short term.

A provider that handles your internet and VoIP in one place entirely removes vendor juggling. Vivant’s business phone service runs on a 100% uptime guarantee with a mobile app, call routing, and live human support, on one monthly bill.

Get in touch with Vivant today to find out if VoIP is the right fit for your business.

FREQUENTLY ASKED QUESTIONS

What Does VoIP Stand For?

VoIP stands for Voice over Internet Protocol. It enables you to make and receive phone calls over an internet connection instead of a traditional phone line.

Is VoIP Good for Small Businesses?

Yes, especially for businesses with a mid-sized team, working across multiple locations, or with a growing call volume. Using VoIP usually costs less than a landline and includes features that cost extra on a traditional phone system.

What Do I Need to Use VoIP?

You need a reliable internet connection and a device to make calls on. The device can be a VoIP desk phone, a computer with a softphone app, or a mobile app. Most providers can set up all three under the same business number.

Can VoIP Work Without Internet Connection?

Not on its own. VoIP runs over an internet connection, so if the connection fails, calls can’t come in. Most business VoIP systems get around this by routing calls to mobile devices or a backup internet line during outages.

How Is VoIP Different from a Regular Phone?

A regular phone sends your voice as an electrical signal over copper wire. VoIP converts your voice into digital data and sends it over the internet. The result on the other end is the same, but VoIP is cheaper to run, easier to scale, and comes with features a regular phone can’t offer.