Topic overview

Business telephone systems

Business man holding smartphone

Business telephone systems have advanced incredibly in the last few years. New communications technologies such as VoIP, cloud phone systems, instant messaging, social media and mass-market video conferencing have fundamentally changed how we communicate.

At the heart of every business is an effective phone system that’s shaped around the way you work.

Modern business phone systems provide level of connectivity, flexibility – and crucially reliability – that was simply unheard of even ten years ago.

The increase in high-speed internet connectivity, powerful mobile devices and a significant reduction in the size and cost of hardware means that businesses can invest smartly in business phone systems which won't break the bank.

In this round-up we describe the different types of business phone systems available and provide information that can help you choose the best one for you.

Types of business telephone system

If you’re in the market for a new business telephone system, there are five types to choose from:

  • Virtual phone systems. Think of your old, traditional switchboard, but modelled completely in software and capable of creating a virtual phone system by using a mixture of mobile phones and landlines.
  • VoIP (Voice over Internet Protocol). VoIP phone systems such as HubSpot use the internet and VoIP software allowing you to make calls direct from the VoIP platform.
  • Self-hosted VoIP. The business pays for the VoIP hardware required and hosts it in their own premises.
  • Cloud-based VoIP. Removes the requirement for any hardware (other than IP phones) on site and moves the switchboard element to the service provider's servers. They can also be called cloud phone systems or cloud telephone systems.
  • Dedicated phone lines. A traditional phone system utilising copper wires and, usually, hardware-based central switchboards. Since 5 September 2023, it has no longer been possible to buy new Public Switched Telephone Network (PSTN) connections. As part of "The Big Switch Off", traditional copper-wire phone networks are being switched off and replaced with faster, more secure, full-fibre digital systems.

The lines between office phone systems and other elements of business communications are blurring. Many businesses are adopting unified messaging systems that bring together different communication tools.

A good unified messaging system is flexible and adaptable. For instance, it can automatically divert calls to your mobile when you're out of the office or display data from your CRM system when a customer calls.

Which business phone system?

If you’re shopping for a new small business telephone system, the amount of options can be bewildering.

To narrow down your search, ask yourself three questions:

  1. Do you require a full business phone system that includes physical office telephones or could you, your business and your staff use mobile phones instead?
  2. If you require physical devices, is your internet connection fast and strong enough to support a VoIP phone system?
  3. If a VoIP system is a possibility, do you want to host the equipment or rely on cloud hosting?

Before going ahead and investing in a new communications platform for your business, consider exactly what you need to do with your phone system and how you expect to use it. For example, will everyone be based in one place or will they roam? How many people are you connecting?

It’s crucial that develop a clear picture of the volume and type of calls you expect to make and receive. You should think about growth plans, and invest in a business phone system that is cost-effective and can support your growth, not inhibit it.

Here we go into detail about the various types of business phone systems on the market, including their pros and cons to help you make the right decision.

Virtual phone system

Virtual phone systems works by connecting a business phone number to one or many mobile phones and landlines. Software is used to set up call-forwarding, queuing and provide phone tree features.

Ideal if you're a sole trader or run a business that consists of remote workers.


  • No expensive equipment required
  • Simple to set up and maintain via one piece of software
  • Offers the professionalism and configurability of traditional business phone systems at a fraction of the cost


  • Service providers may insist on a 12-month minimum contract which can make switching providers difficult
  • Outbound calls will still be charged to the landline or mobile making the call
  • The quality of calls on lower-cost systems can be poor

VoIP phone system

VoIP - voice over IP - phone systems work by using your internet connection to make or take calls, rather than traditional copper wires.

Ideal if you're a small to medium-sized business with a mixture of on-site and remote workers that wants the features of a sophisticated phone system for a reasonable outlay.


  • VoIP phone systems offer significant cost savings over traditional business phone systems
  • Easy to set up
  • Highly portable
  • Wide range of low-cost phone hardware available


  • Relies on your internet connection
  • Sound quality can suffer if your internet speed is low

Self-hosted or cloud-based?

The choice between a self-hosted VoIP or a cloud-hosted VoIP phone system is will depend largely on the space available for telephony equipment and your budget.

Self-hosted systems allow you to complete control of the hardware, but cloud-based VoIP phone systems are quicker to deploy and easier to scale should your business grow. Cloud based telephone systems are increasingly popular among start-ups and small businesses who are keen to control overheads and minimise fixed costs.

Dedicated phone lines

Dedicated business phone systems use traditional copper telephone lines for calls are being phased out and replaced with full-fibre connections. It is no longer possible to buy such systems. All new phone lines will use fibre connections to route phone calls.

Small business phone systems

VoIP and virtual phone systems are suitable for most small businesses. They’re cost-effective, flexible and reliable, and can scale as your business grows.

There are two traditional phone systems which small businesses have relied on for many years:

  • 'Key' systems have one or more telephone lines coming into your business and every connected telephone will ring when someone calls. Key systems are suitable for businesses with up to five employees and cost from £10 - £25 per month per phone line depending on the features you require.
  • Switchboard systems. A switchboard (sometimes referred to as a 'PBX') offers more capability than a Key system by routing calls to specific extensions, taking voicemail and allocating spare lines to outgoing calls. Entry-level switchboards cost from £150 and come in both hardware and software form.

Outsourced phone systems

If you'd like to take the business of processing calls completely off your premises and out of your hands, you could use a virtual reception desk service or 'eReceptionists'.

You are essentially outsourcing your call centre to a third party which deals with all incoming calls for you and routes them through to your own number if required.

If you're a seasonal business, sole trader, or simply too busy to answer the phone all the time, an outsourced business phone systems may be the best option. As well as always having someone on hand to answer your calls, an outsourced business phone service will add a layer of professionalism to your business which clients and customers may appreciate.

Business phone system round-up

The benefits of virtual telephone systems and VoIP are hard to ignore. Advancements in technology have brought solutions previously reserved for large corporations to the masses, at competitive prices that are much lower than older hardwired phone systems.

Modern business telephone systems have a raft of advanced features which can speed up your business processes and increase customer satisfaction. They include:

  • Special phone numbers, such as free, low-cost or premium rate numbers
  • Call forwarding and voicemail, enabling employees to forward calls onto one another and leave messages
  • Instant messaging, which can be a brilliant alternative to email when quick messages need to be exchanged
  • Conference calling, without the need for an expensive third-party system
  • Interactive voice response (IVR) systems, which automatically answer calls and direct them appropriately

Office phone system suppliers

Every business will have different requirements from a phone system. We recommend that you work with an appropriate supplier to design, install and configure your new phone system.

A good way to identify suitable companies is to seek recommendations from friends and other business owners. It's also worth speaking to your existing IT supplier about the latest in VoIP and virtual telephone technologies.

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