VoIP Advantages & Disadvantages for Small Businesses

Voice over Internet Protocol (VoIP) is now more than just a trendy new technology. VoIP is growing in use worldwide as businesses realise its advantages over conventional means of calling.

However, as with all new technology, VoIP comes with some downsides. As a small business looking to introduce VoIP into your organisation, you need to have a clear understanding on both sides of the coin.

This article explores what VoIP is as well as advantages and disadvantages to help you make an informed decision as you transition.

What is VoIP and what are the advantages and disadvantages for small businesses?

VoIP (short for Voice over Internet Protocol), is a service that allows users to make calls over the Internet or network. The service works by converting analog voice signals into digital packets of information.

These packets are then sent over the Internet to a recipient with an Internet connection on any part of the globe. At the receivers end, the packets are decoded back into voice signals thereby allowing conversations.

Advantages of VoIP for Small Businesses

VoIP offers many benefits to small businesses across the world. Among them are the following:

Lower Costs

Every business, large or small, closely monitors and protects its bottom line. For small businesses, in particular, limited budgets mean that you have to explore every possible cost-saving opportunity. One of the ways you can realise cost savings is by adopting a VoIP phone system. Unlike conventional calling systems, VoIP requires much less initial hardware to buy or lease. Additionally, monthly fees are also lower in comparison.

For long distance calls in particular, conventional calling systems are no match for the affordability of VoIP. The cost of maintenance is also lower for businesses who use cloud VoIP services. Lastly, most service providers will typically offer 24/7 support which means you do not have to include IT support expenditure into your budget.

Increased Accessibility

Other than cost efficiency, one other key benefit of VoIP is accessibility. A cloud-based VoIP service offers the unique ability to make calls from anywhere to anywhere on the globe. With the right credentials, anyone can access your VoIP account to make and receive calls from any location.

This is especially important to small businesses which may not have centralised physical offices. This VoIP capability allows you to bring your entire workforce, regardless of location, on the same communication channels. It also helps that VoIP services are not restricted to any device. You can enjoy the full VoIP service on your mobile phone, tablet and computer with great ease.

Seamless Portability

On registering for VoIP services, you are assigned a VoIP number, also known as a virtual number. This number is completely portable meaning you can use the same number regardless of your location.

Even in the event you change your business address, you retain the same virtual number. This is important for small businesses who are still just trying to find their feet.

Higher Scalability

This is one of the most talked about benefits of VoIP particularly among start-ups and small businesses but what exactly does it mean? As a small business or startup, you are looking for services that just cover your needs without having to overspend in anticipation of future growth.

VoIP gives you that option. You only pay for the service you need. In case you expect a spike in demand during the holidays or you are adding staff members, just toggle your preferences and you are good to go. No need to purchase dedicated hardware or additional lines to cover short-term or growth needs.

Numerous Helpful Features

Other than calling services, VoIP also offers several other advanced features that can be particularly helpful to small businesses. These features include;

  • Auto attendant and call transferring which allows even a one-person business project an image of a large corporation.
  • Multi-party calling capabilities mean that a business does not have to contract a separate conference call provider.

Better Voice Quality

Although this was a challenge during the early stages of VoIP, the situation is now completely different. Having a robust Internet connection with good bandwidth means you will hear crisp and clear sound with no lag, latency issues or dropouts.

Supports Multitasking

In addition to traditional phone calls, VoIP also allows you to send images, documents and video. This means you can have more integrated meetings with your staff, clients or customers from all parts of the world.

Increased Security

Part of the biggest problem we face in the information age is the security of our data and information.

By leveraging advanced IP technology such as identity management and encryption, VoIP helps secure your data and information from potential attackers. Hosted VoIP providers take it upon themselves to protect their clients’ information.

Disadvantages of VoIP to Small Businesses

As with all forms of technology, VoIP also has some disadvantages. They include:

Reliable Internet Connection Required

You cannot operate a VoIP phone system if you do not have a reliable Internet connection with sufficient bandwidth. Additionally, the quality of service will depend on the quality of your Internet connection.


Given that the information packets have to be reassembled to make a successful call, low bandwidth can make some calls delay, lag or even disappear. However, as newer and more sophisticated algorithms come into use, this is becoming less of an issue.

Power Outages

VoIP services require a constant Internet connection and a power source. If any of these services fail, you have no communication network. This can be frustrating in areas that experience extended power outages.

No Location Tracking for Emergency Calls

In a VoIP service, calls come from an IP address with no cell tower information or GPS data. This might make it impossible for emergency services to track call location in case of an emergency.

Evaluating the pros and cons of VoIP to a small business, it is clear that the benefits outweigh the few drawbacks.

To discuss VoIP for your business, be it small or otherwise please don’t hesitate to get in touch.


Written by Ben Rogers

Group Marketing Manager at AdEPT