The main reason that it is important for businesses to have a website is how people are likely to find you. These days most people will go online and research products and companies before they make a purchase, if you don't have a website you are missing out on all of this potential business. Even if people don't buy your product online they are still likely to research it online so you have to have a website so these people can learn about your business.
A website is also important because it helps you establish credibility as a business. Most people just assume that you have a website since the vast majority of businesses do, at least the vast majority of big companies do. There are actually still quite a few small businesses that don't have a website and without one this is exactly what they will remain. If you don't have a website that you can refer people to potential customers are going to assume that you are a small time company that does not take their business seriously. Once you establish this reputation it is going to be hard to make sales.
A website will not only give you credibility but it will also help to give the impression that your company is bigger and more successful than it may actually be. One of the great things about the internet is that the size of your company does not really matter. There is no reason that you can't get your site to rank in Google ahead of a large multinational competitor and funnel off some of their traffic. This is a big part of the reason that a website is even more important for a small business than a big one, it tends to level the playing field.
Clearly there are still a lot of small businesses that do not have websites, there are various reasons for this but mostly it comes down to the belief that they are expensive. It is rather surprising how much small business owners believe a website will cost them. In truth a website can be built for very little money and if you are on a tight budget you can even get free websites. Remember you don't need a giant ten thousand page website for your business, just a simple site that tells people about your company and your products will be more than enough.
Source: SuperWebAnalyst