Small businesses have been hit particularly hard by the economic recession and some entrepreneurs are reluctant to risk capital in new companies.

However, the recession is creating an opening for Chicago Business VoIP, a West Loop startup operated by four part-time technology professionals.

“It’s actually never been better for us, never busier,” said Tim Conti, president of CBV, which hosts VoIP, or voice over Internet protocol, for businesses with fewer than 10 telephone lines.

Between October and December, CBV brought in 15 new clients; it then doubled to 30 from Jan. 1 until the present, according to Conti. Clients are provided with a Cisco Systems Inc. handset that looks and operates like a traditional phone or fax machine. But instead of using a landline, VoIP technology routes phone calls over an existing Internet connection.

The firm's small clients are too small to be of interest to a larger VoIP business where some of the entrepreneurs still have day jobs.

CBV customers pay a monthly flat rate of $40 to $50 per phone for calls to anywhere in the United States and Canada. International calls are billed per minute based on the country, but the rates are typically much cheaper than on landlines. Conti reports that his company’s services have decreased clients’ telecommunications expenses by an average of 30 percent.

Among Conti’s customers are law firms, private equity firms, a mortgage company, a wedding photographer and a detective agency. About 90 percent are located in the Chicago area and onsite assistance is available to local clients who request it.

Tom Hartman, a CBV customer who owns a small communications technology business in Palatine, raves about the service’s cost savings, clear voice quality and call-forwarding features. Since Hartman travels frequently, he also takes advantage of the ability to transfer his phone to a different Internet connection, while keeping his number the same.

“I get the same functionality as a Fortune 100 company and I’m small,” Hartman said. 

Conti's business idea grew out of his work for Geckotech LLC, a six-year-old company at 300 N. Elizabeth St. in the West Loop that provides VoIP technology to businesses with between 10 and 500 phones. Conti noticed many requests from clients with fewer than 10 phone lines— a market that Geckotech does not serve.

“After seeing the market opportunity and knowing that the advantages were just as strong for that market segment, we decided to do a spinoff,” Conti said.

Conti still works full time for Geckotech, and CBV is actually housed in the Geckotech office. 

Steve Hilton, vice president at Yankee Group Research Inc., a Boston-based technology research firm, said that while VoIP calls are cheaper than landlines, call quality can sometimes be hijacked by external variables.

“[CBV] can control the quality of data inside the small business’s office and at their own facility, but they can’t control it in between,” he said. “That’s where these implementations can go awry.”

The quality of VoIP is dependent on the Internet connection between the small business and CBV—if it’s poor quality, the voice quality may be poor as well. Conti runs assessment tests on the connections, but admits that this risk is “the biggest drawback” of VoIP.

Ryan Potts, a CBV customer who heads Brotschul Potts LLC, a law firm in Chicago, is pleased with his VoIP call quality and cost-savings. He has not installed a backup system for his Internet connection, which leaves his phone system vulnerable.

“Overall it’s been pretty good,” he said. “We had AT&T before and [with VoIP] we’re saving $125 per month." However, he added, "We had one instance where the Internet went down in the building, so the phones went down. That wasn’t an issue with the phones, but it’s one drawback of the product.”

Rebecca Swenson, an analyst at International Data Corp., a provider of market intelligence and advisory services for telecommunications, cautioned about the difficulty of tracking 911 calls from a VoIP phone.

“Because of the way that VoIP works, the phone number that you’re calling from is not tied to a location; it’s tied to an IP address,” she said. “When you have remote workers and they’re dialing from a hotel, you won’t know if they’re at the hotel or at their office.”

Swenson expects technology professionals to find solutions to this problem and she sees a bright future for VoIP. She estimates that VoIP phones currently represent around 15 percent of total landlines in the United States. Between 2007 and 2008, VoIP usage grew by 20 percent, according to Swenson’s research.

She predicts that this rapid growth rate will continue through 2012—good news for CBV.