I've run into a number of businesses who are hesitant to purchase a professional website over the years. I understand completely where they are coming from. Budgets are tight with small businesses and a website is often viewed as a luxury, not a necessity.
Unfortunately, this couldn't be further from the truth. We are entering a new era of business. Customers do not look up businesses in the yellow pages anymore. Moreover, a professional web design is necessary for instilling confidence. For example, when I come across a bad website online I immediately start to wonder if the business is actually legit or if it's just a scam. You don't want your customer's first reactions to be, "Is this business a scam?" Needless to say, that kind of reaction is not good for business.
The other approach some small business owners will take is, "Well, I saw on Craigslist that this designer will make my site for $300. I'll go with them." Sadly enough, people who design websites for $300 will, at best, put your business in a generic template that looks amateur. Also, don't expect them to follow up with any customer support over the next year. If you want to make any small changes to your site, they will definitely charge you a pretty penny for them. Moreover, the difference between a $300 website and a $700 website is equivalent to the difference between a tree fort and a residential, two-story house. I can't stress this enough. Spending $300 on a website will not save you $400, but rather, you will lose $300. The back end code will not be standards compliant or search optimized, and you will end up spending a lot more money later on when you hire a professional to fix it.
I've run into a lot of people over the years who have made this mistake. Your website is the face of your business. Don't let an amateur mess it up.