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Custom-built sites are a must for any business striving to appear unique and professional online. Template sites are best for small businesses with a very low website budget or for whom their website is not that important a component in their overall business. Though template-based websites cost less and are a little quicker to build, there's no guarantee that another small business won't be using the same exact template as you.
A template is a pre-packaged visual design sold by a third party. It defines the overall look of your website including the background, main navigation links, and masthead area. You'll choose which look you want from a template catalog, and then it's turned into a website that contains your words and pictures.
Pro -- cheaper than a custom-built website.
Pro -- the site can sometimes be finished more quickly.
Con -- can look generic or ... well ... like a template, especially if your site has many pages.
Con -- no guarantee that another website won't be using the same exact template as you.
A custom visual design is one created by me from scratch based on your preferences and specifications (it can also be created by a third-party that you hire). The visual design will complement the purpose of the site.
Pro -- a unique look for your website that matches your business theme.
Con -- more expensive.
Con -- takes a little longer.