1) People use the Internet like they used to use the phone book.
I used to tell small business owners that it didn't matter if they had a website if most of their business was local. But now almost everyone uses the Internet to get information - even local information. So be there or beware; people who are searching will find other local businesses rather than yours.
2) A business website gives your business legitimacy.
People expect businesses to have their own websites, just as they used to expect businesses to have a real physical business address. Not having a business website raises questions in customers eyes. Are you a technological naif? A stick-in-the-mud? Or such a shoestring startup that you can't even afford to do this? All things you don't want people thinking about your business!
3) A business website gives you another marketing channel.
Having a business website gives you an automatic Internet presence. Think of it as a billboard on the 'Net. Instantly you have another chance to introduce people to your products and services and another way for people to find you. (Of course, how many eyes your billboard attracts will depend on your conscious marketing efforts to get people's attention, such as Search Engine Optimization, blogging, using social media, and online advertising.)
4) A business website gives you another opportunity for data collection/lead generation.
For instance, getting people to write their email addresses on pieces of paper and handing them in at a physical storefront is hard. But getting people to type their email address into a box on a website is much, much easier - especially if they perceive that they're getting something for it, such as a newsletter, a special report or an ebook. And once you have the email address, you have another way to reach your potential customer.
So a business website is now like the business card - a must-have for any business.
If you don't already have one, get started with How to Get and Register a Domain Name, the first step to getting your business online.