What is a Business Phone System? Why Do You Need One?

A business phone system is a telecommunication solution designed to handle a high volume of calls and SMS within a company. Beyond calling and messaging, it has features such as call routing, call queuing, phone extension, and IVR (Interactive Voice Response) to direct callers to the right department efficiently.

Moreover, business phone systems support conference calls, video calls, and mobile communications, allowing you to connect and collaborate effectively no matter where you are. They also provide detailed caller insights and history for improved internal workflows and customer interactions.

Imagine starting a business that has grown faster than you anticipated. Managing calls was easy initially, but now, with hundreds of calls daily, it’s overwhelming. Missing these calls means missing opportunities—potential sales, vital customer feedback, and chances to expand your customer base are all slipping away.

With a business phone system, you can set up a small call center to handle a high volume of calls more efficiently. It lets you share the same phone number among your team members, ensuring no calls go unanswered. You can route calls to the appropriate department or team member based on the caller’s input or the automatic rules you set up.

Moreover, with the high volume of calls your team handles, it’s challenging to remember previous interactions with the same customer. In a business phone system, your team can give tags (like “Potential Customer”) and create notes for the contacts to see what was discussed in previous calls. Customers don’t have to repeat themselves each time they call.

Business phone systems range from traditional setups like Key System Units (KSU) to modern solutions like VoIP phone systems. While they are all designed for efficient call management, the operational methods and technologies of different types of phone systems can significantly vary. Understanding its types can help you choose the right phone system for your business.

Key System Units (KSU) are traditional phone systems that use landlines to manage multiple telephone lines within small businesses.

A KSU phone system is suitable for businesses with fewer than 40 employees. It operates using a central switching device that allows users to manually select phone lines. Each phone connected to a KSU has buttons representing different lines, so users can easily see which lines are in use and choose which one to pick up or call out on.

A KSU system typically has features such as call holding, line management, and extensions without extensive setup or maintenance.

Private Branch Exchange (PBX) is a private telephone network used within a company to manage incoming and outgoing calls, as well as internal communication.

A PBX system connects the internal telephones within a business and also connects them to the public switched telephone network (PSTN), VoIP providers, and SIP trunks.

PBX can handle complex call routing, call transfer, and call queuing without manual intervention. These systems have a wide range of telephony features such as call transfer, call holding, voicemail, call conferencing, and interactive voice menus (IVRs), which help direct callers to the appropriate department without manual intervention.

I. On-premises PBX
 

On-premises PBX systems are installed and managed within a company’s own facilities. These systems connect internal phones to each other and to the external phone network with in-house servers. The company has full control over the phone network - they maintain all the hardware and software, allowing for complete customization.

However, an on-premise PBX phone system requires an upfront investment in hardware, infrastructure, and ongoing IT maintenance. It is ideal for businesses that need high security and reliability in their communications.

II. Hosted PBX
 

Hosted PBX, or cloud PBX, is a system where the service provider hosts and maintains all PBX technology off-site, usually in the cloud. Businesses access their phone system through the Internet, which reduces the need for large upfront investments and ongoing maintenance.

A hosted PBX system usually makes adding new phone lines or features quick and easy. It has functionalities similar to an on-premises PBX but is accessible from anywhere with an internet connection. Hosted PBX is a good choice for businesses with remote teams or those looking to reduce IT overhead while still leveraging a powerful phone system.

A VoIP system is a modern phone system that uses VoIP (Voice over Internet Protocol) technology to make and receive calls over the Internet instead of traditional phone lines. The technology converts your voice into digital data that travels over the Internet to the recipient. VoIP allows for a wide range of communications, including voice calls, video calls, text messaging, and file sharing, all using the same broadband connection.

VoIP phone systems have robust communication tools, including call forwarding, caller ID, voicemail to email, and call monitoring. Moreover, you can purchase virtual phone numbers from other countries to establish a local business presence internationally and make calls at local rates.

A VoIP-powered business phone system can be accessed across various devices, from traditional desk phones to smartphones and computers. It connects you with your customers no matter where you are.

The cost of a business phone system varies widely based on the type of system, the number of users, and the features you need. Traditional KSU systems can range from $300 to $1,000 per user for setup, while PBX systems can range from $500 to $7,000, depending on customization, hardware, and whether you have an on-premise or hosted PBX. Maintenance and upgrades can also affect long-term expenses.

VoIP systems are generally more cost-effective—a VoIP plan starts from as low as $15 per monthly user. Users can access advanced communication features without significant hardware investments. Its affordability makes VoIP ideal for businesses of all sizes, from start-ups to large enterprises.

Choosing the right business phone system is crucial for improving customer service and business growth. From simple KSU systems for start-ups to advanced VoIP solutions for small businesses to large enterprises, each system provides your office with unique benefits for internal and external business communication.

Calilio is a VoIP-powered business phone system with a suite of powerful features designed to meet your evolving needs. Sign up today and scale your business with a complete communication solution.

If you run a business that handles multiple calls daily, a business phone system can help you manage the calls professionally, improving your team collaboration, customer service and operational efficiency.

VoIP system is often best for small businesses because they are cost-effective, scalable, and offer a wide range of features tailored to your needs. Calilio allow you to make calls over the internet, support remote work, and can easily expand as your business grows.

Follow the tips below to choose the right phone system for your business.

• Consider the size of your business, the volume of calls, and specific features you need.
• Ensure you can add lines and features as your business grows.
• Determine your budget for initial setup, upgrades and ongoing maintenance costs.
• Choose a phone system that is easy for your team to use and manage daily.
• Look for reliable customer support to minimize downtime and technical issues.