Starting a small business is a grueling process that forces the owner to make an entire series of decisions in rapid succession, all of which directly impact the success and growth potential of their company for years to come. Given that about half of all small businesses fail within the first five years, planning ahead is crucial to beating that statistic. It may seem difficult to write a five year business plan when you're first starting out, but remember that it doesn't have to be set in stone. If it's well-written, a strong business plan will be as flexible as it is rational, allowing your company to weather any major shifts.
Picking the right business phone system, also referred to as a Unified Communications System, is an important step in building a flexible foundation for your small business. However, the wide array of choices available on the market today can make the decision making process mind-numbing as well as murky. Acronyms like PBX, PSTN, and VoIP are further complicated by BYOD and discussions of hosted vs. cloud hosted systems. It is no wonder that many small businesses end up simply using the first system that appears to meet their needs. Unfortunately, to survive, small businesses rely on an optimized balance of cost and service. This balance can be hard to achieve if you don't fully understand the unified communications market.
Knowing Your Phone Systems
There are three major system types that you will regularly hear about: PBX, PSTN, and VoIP. They are identified by the way data is transmitted and how data is redirected in the system. PBX and PSTN are more traditional technologies, while VoIP is emerging as the industry standard. However, there is a lot of nuance to each system, especially as PBX and PSTN have adapted to compete with VoIP, complicating the market but also giving businesses an opportunity to find their perfect fit. For more information on each of these systems, we have put together a complete guide.
The Primary Distinction
Choosing the right business phone system can be complicated, but there is an initial choice you should make before diving into any of the details. Are you going to anchor the system to your landline or are you going to use a VoIP (Voice over Internet Protocol) connection? This decision comes down to four factors.
1. Where Your Employees Work
The physical location of your employees should be a primary factor in your decision-making process. Study your five year plan. If you envision customers or clients ever needing to contact an employee that works remotely, then your decision is made. You need a cloud-based VoIP to allow your employees to interact with customers as though they were physically sitting in your office. Investing in any other type of plan at this early stage could lead to unforeseen costs that would negatively impact your business while it's still vulnerable.
2. Your Office Layout
Before you decide whether to use a landline or a VoIP connection, you should do a survey of your office space. Where are your phone jacks located, and how many do you have? If you have too few, or they are poorly placed throughout the office, then a landline is probably not a good idea. Installing new jacks, running cable, and properly covering those cables is as time consuming as it is costly, so you should opt for a VoIP if your office layout doesn't already match your needs.
3. Initial Costs vs. Monthly Costs
On average, using a landline is cheaper on a monthly basis. A survey of several different providers shows that using a landline connection costs between $20 and $40 per month per line on average. However, for a business phone system, you have to consider the initial investment in equipment as well. Your standard PBX (Private Branch Exchange) requires about $1,000 in equipment per extension. Based on a monthly cost survey, a VoIP connection will cost a little more on a monthly basis, about $30 to $60 per month per line. However, the initial equipment only costs about $200. Your business will also need a strong internet connection, but most small businesses will require that service in order to compete anyway.
4. Desired Features
The final deciding factor is more subjective, as it comes down to features. A standard, landline PBX system provides an automated attendant and voicemail; however, that is usually the limit of their capabilities. With a VoIP, the use of an internet connection allows for more advanced features, including video conference calls, click-to-call functionality, and visual voicemail. Whether or not these features matter to you comes down to your industry and personal preference, but there is a sizeable gap in the breadth of available features that you should be aware of from the beginning.
Based on these four primary categories, a VoIP business phone system tends to be a better fit for the vast majority of small businesses. Their physical flexibility allows a VoIP system to grow with your business without requiring a physical reconfiguration of your office or the installation of additional equipment. Plus, the added features will help you to compete in a highly competitive market. Click-to-call alone makes a huge difference when a potential customer is deciding which business to call first. To let you in on a poorly-kept secret: easier is always better.
Now, knowing that a VoIP is most likely to better serve your interests does significantly narrow your options, but there are a lot of companies that offer VoIP services. To help you out, we have done an overview of three of the top VoIP providers: Ring Central, Nextiva, and Grasshopper.
Of the companies researched, Ring Central was the most transparent in regard to pricing and devices. Their monthly costs, based on an annual plan, range from $19.99 to $49.99 per line. Although their Premium package ($34.99) remains their most popular, most small businesses would do just fine with the Standard plan ($24.99). The Premium package does offer a lot of great features, such as automatic call recording, real time analytics, and open platform integration.
However, these features serve mostly to guarantee the quality of service, particularly for offices that may have multiple locations or businesses that use several different applications for intra-office communications. The Standard plan's offering of unlimited users, video meetings, and integration with many commonly used platforms is more than enough for your average small business.
In regard to devices, Ring Central was the only site that made their devices easy to find. You can bring your own devices into any of these plans; however, if you're looking to outfit your desks with company phones, then this is information you will need. You can purchase desk phones for $90 to $400 each, with the best feature vs. cost balance running about $200 a piece.
Voted U.S. News' 2020 Best Business Phone Service, Nextiva has a lot of fans. Their annual packages range from $20 to $30 per line per month, with their best option, the Pro plan, coming in at $25 per line per month. Nextiva's $30 Enterprise plan offers many of the same features as Ring Central, focusing primarily on the management of employees and quality assurance. By contrast, the Pro plan offers the best balance of features among their three options. It should be noted that Nextiva's ratings do appear to be marginally higher; however, they also do not offer the same breadth of features as Ring Central.
The primary difference comes down to video conferencing and app integration. Nextiva's Pro plan is a great, cost effective, and streamlined plan with a proven service record. However, if you rely on video conferencing with remote employees or your company relies on communication tools such as Slack, 365, or G suite, then Ring Central offers more integrative options for your business.
In a lot of ways, Grasshopper is a completely separate approach. Their plans range from $26 to $80 per month on an annual basis. Instead of charging per line, they have three set levels. At the Basic level ($26) your business gets one phone number with up to three extensions, including unlimited minutes, voicemail, and key greetings. At the Premium level ($44), you receive three separate phone numbers for your business with unlimited extensions as well as some additional features, including call transferring and instant text message response. The Platinum level ($80) bumps you up to five phone numbers, with a couple of additional features that are core to very few businesses.
Essentially, Grasshopper appears to work best for small businesses that require several numbers in order to appeal to a wider region. Unfortunately, as helpful as their approach can be for a wider marketing campaign, their plans do not offer the same level of technological integration as Nextiva or Ring Central. Instead, Grasshopper provides a straightforward option for relatively low cost.
In the end, all three companies and other providers can offer great plan options for small businesses but differ based on their technological networking capabilities. To decide which plan is right for you, consider how essential each of these features is to the daily workings of your office and push yourself to imagine where you are going to be one year from now. Due to the nature of VoIP systems, you can always upgrade or change your provider next year.