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Phone Systems for Small Businesses: Which Should You Choose?

Finger pressing button on phone

Small to medium size business owners know how important it is to invest in a phone system.

Whether you are looking for better customer service, more efficient operations, reducing equipment expenses or just want more advanced features, your telephone system is a critical part of any growing, successful business.

Yes, email and messaging applications have added to the ways businesses can communicate with staff and customers, but you still need a phone system to handle numerous different activities, including:

  • Customer service and support.
  • Sales and procurement.
  • Marketing research.
  • Basic office communication.
  • Employee hiring and recruitment.
  • Meeting and group calls.

What you might not know, however, is that you have more than one option when it comes to choosing your phone system. You’re no longer locked into the traditional landline phone system, with all its limitations and expenses. 

If you’ve been wanting to upgrade your phone system to include more features or reduce the cost of your monthly phone bill, you can do that. 

In this guide, we’ll look at the four main types of systems available to businesses, their advantages and disadvantages, and which one is most likely to be the best fit for a small business.


The Simple Guide to Business

Phone Systems – Everything you should consider before changing your business phone system.


Types of Phone Systems


Analog systems have supported businesses for decades and are the type of telephone with which you’re most likely to be familiar with. Running on standard copper wire, analog phone systems are reliable, offer high voice quality, and come with many standard features such as voicemail, caller id, call waiting, and even conference calling in some cases.

Although analog systems are cheap and easy to maintain, they offer minimal expansion capabilities and can be difficult and costly to change. Unlike other systems, analog phones use non-modular hardware, meaning changing an extension's location requires manual rewiring, which can be costly and time-consuming. 


  • Cheap and easy to install.
  • Require little maintenance.
  • Clear voice quality and reliable service.


  • Non-modular hardware.
  • Expensive to change.
  • Incompatible with most digital voice technologies such as VoIP.
  • It cannot support many lines at once.



Short for central exchange, Centrex phone systems also run on a copper wire infrastructure, meaning they provide the same level of voice clarity and reliability as analog phone systems but with a few more features.

The main advantage of Centrex is it allows businesses to have many separate phone lines on the same number and also provides businesses with the option to transfer calls to different lines.

The most notable downside to the Centrex system is that each additional phone line will cost extra, which can prove costly for some businesses. Furthermore, Centrex provides little capacity to add on further functionality, and like analog lines, can be expensive to change once set up.

For many years, Centrex-based systems were considered the main competitor of digital/PBX phone systems, which we will look at next.


  • Reliable.
  • Low initial investment.
  • Allows a company to have multiple phone lines for different business activities.


  • Limited features.
  • There is an extra cost for each additional line.
  • Expensive to change once installed.


Avoid the big mistakes most businesses make when looking for a business phone system. Read the FREE Simple Guide to Business Phone Systems.


Unlike analog phones, PBX (private branch exchange) is 100% IP and software-based and offers a much more comprehensive range of features and customizability compared to Centrex. Unlike the other two options we have covered, PBX allows users to have a single phone line and use extension numbers to route calls to specific employees and departments.

Because PBX does not rely on copper wire and circuits, it provides a much greater degree of flexibility when it comes to add-ons and changes. Some PBX systems even come with Automated Call Distribution (ACD), an automated service that answers and routes incoming calls to the appropriate agent or employee.


  • Most changes can be made using software.
  • More cost-effective than Centrex.
  • Supports a wide variety of features beyond what the standard analog or Centrex system can.
  • Low operating costs.


  • In the internet connection or electricity goes down all phone services will be cut off.
  • Often requires the hiring of an IT professional to maintain and manage the network.
  • The initial investment can be high due to the purchasing of hardware and software licensing.



VoIP, which stands for voice over internet protocol, is another software-based option that has risen in popularity over the last decade. Unlike traditional phone systems, VoIP allows people to make voice calls over an internet connection and is considerably cheaper than the other digital options, which require an initial investment in hardware and software licenses. 

In fact, VoIP systems can be used from a desktop computer, mobile phone, or tablet without purchasing any additional hardware aside from maybe a headset.

Another benefit of VoIP systems is the high level of functionality it offers, which generally comes at no extra cost. Traditional phones can even be made VoIP capable by using an analog telephone adapter (ATA).

Aside from the cost, a significant advantage of VoIP is high scalability and flexibility. As businesses grow, so do their communication needs. For example, say your small business decides to open up a new branch or office in another city. If you were using traditional phone systems, this would require you spending money on expensive hardware and installation. 

However, with VoIP, new team members can be added at next to no extra cost and can be scaled up or down depending on the business's needs.

On top of all this, because all calls are made over the internet, users don't have to worry about standard long distance charges, which can prove costly for a growing business. 


  • Least expensive option.
  • Offers high level functionality.
  • Extra lines can be added or dropped with ease and limited cost.
  • No initial investment in expensive hardware and installation costs.
  • Can be used from almost any device with an internet connection.
  • Provides users with high level voice quality.
  • No long distance charges.


  • If the user has a poor internet connection, voice clarity can suffer.
  • Like PBX, in the event of a power outage, the system could go down.


Still have questions? Find out how to choose the best phone system for your business in The Simple Guide to Business Phone Systems.


Which Option Is the Best?

When we take all options into account, and weigh their respective pros and cons against one another, it's not hard to come to see that VoIP is the superior system. Not only does it offer high quality voice communication that can be used anywhere an internet connection is available, but VOIP is only a fraction of the cost of the other systems.  

Moreover, no other phone system offers the same level of scalability as VoIP. As we have seen, all other options either require a pricey initial setup or are costly to change or add on to. This fact alone is a big reason why so many small businesses are turning to VoIP, especially those just starting. 

In the competitive business landscape, companies need to save every dollar they can, and switching to a VoIP telephone system can, in some cases, save a company thousands of dollars a year. If your business is one of the thousands of small businesses still paying for costly analog phone systems, it may be time to make the switch to VoIP.

Are you looking for a phone system with all the features you need in one easy package while saving you money every month compared to traditional landlines?

Get the answers you need by speaking with an experienced MCTV BusinessPro team member that will help you discover the best phone system solution for your business and your budget.

Click here to claim your free business phone system consultation to discuss your phone system needs. No commitments. No pressure. Just advice.