I seem to get this question a lot.  Here is an email I sent to a group of which I am a member, answering this question.  Normally I would post something like this on the main blog I write, the HubSpot Internet Marketing Blog, but this was a bit too self promotional, so I don't think I will do that.

Which Blog Software will be Best for my Business?

Dear ______ -

Your question inspired me to do some thinking and writing.  Here is a thorough review of the topic of blogging for business.  If topics like this interest you, you should subscribe this blog - http://blog.hubspot.com/ - I write about topics like this all the time, and its free.

Great reasons to use a blog for business:

1. A blog helps personalize your business, helping prospects and customers get to know you better
2. A blog help you get found by more prospects in search engines (SEO), if you set up your blog properly
3. A blog helps you get found by more prospects in the blogosphere, if you set up your blog properly
4. A blog helps you get found by more prospects in social media (Digg, Facebook), if you use your blog properly
5. A blog can be a good lead nurturing tool, maintaining contact with prospects until they are ready to buy

To accomplish these goals, there are some "must-have" features with blogs:

Blog functionality:

1. Uses your own business URL, not a free subdomain of someone else's URL
2. Allows subscriptions by email and RSS
3. Automatically integrates with social media (Digg, Reddit, StumbleUpon,etc.)
4. Automatically send new blog posts to your subscribers by email, and lets you import old lists of subscribers
5. Automatically integrates with social media sites (Digg, StubleUpon, etc.)

Analytics functionality:

1. Allows you to track both email and RSS subscribers over time
2. Ability to measure visitors and leads from your blog
3. Ability to measure your rank for important search terms in search engines
4. Ability to track and measure your competition as compared to you

Support and expertise:

1. Has support people that answer technical / support questions
2. Has people, articles and videos that teach you how to be successful with your blog (not support, but marketing expertise)

Here are the three suggested paths to blogging based on price:

1. OK/Cheapest ($10-$50/month): Template using Wordpress or Typepad. With some technical knowledge and advice from people in forums, you can set up a blog with some (but not all) of the features above. To get more of the features you can integrate things like Feedburner, Google Analytics, maybe Constant Contact, widgets from the social media websites and more - this takes some technical know-how in my opinion.
2. Better/Mid-Range (~$250/month): HubSpot - You get all of the functionality I mention above, including training and advice from experts so you can be more successful with your blog. This requires zero technical knowledge. Also included is an SEO system, analytics, competitive tracking and lead tracking.
3. Best/Expensive ($3K-10K+, plus monthly hosting): A custom blog system from a web design firm. A web design firm can build you a custom blog (FYI, they will probably use Wordpress to power it) including whatever features you want, and they will integrate any system or features you want (like Google Analytics, HubSpot, lead tracking tools, SEO tools, etc.). This will always meet your needs exactly because a good firm will figure out your needs and built to that. But make sure to ask them for examples of clients who are successful with their blogs - and make them show you the number of comments, Technorati rank, traffic and search engine results to prove it. You should then as the client if the web design firm actually helped make them successful with advice, training and marketing expertise, or if they just built a good technology platform.

Small Business Blogging Case Study (with Videos):

Note - since I know HubSpot best, yes this is a HubSpot customer - ignore this if you think it is too promotional.  But even if you ignore every time he says the word HubSpot, I think it is still a valuable case study to show the power of business blogging. Business Blog Case Study

Biggest mistake made by business blogs:

Hosting your blog on a Blogspot or Typepad or other free URL.  Just like you should not use a hotmail email address or your home mailing address for your business, you should not host your business blog on  Not only is this a bad idea for branding reasons, but if your blog is successful, it is impossible to move it anywhere else some number of months down the road if it is not on a URL you won and control.  In fact, using a free Blog URL is WORSE than using a free email address or mailing address, since both mail and email can be forwarded to a new address.  You cannot forward a blog from a Free URL to a new one - this is super important to know.  This is one of the biggest mistakes you can make when you start blogging.  Just trust me, your blog should be on a URL you own and control.  I have made this mistake myself.  You can use software from Blogger or Typepad if you want to, just make SURE each article you write has a URL like "www.yourcompany.com/article1" or "blog.yourcompany.com/article1" - do not do something like "yourcompany.blogspot.com/article1" or "yourcompany.typepad.com/article1").

Feel free to contact me with any other blogging questions.  I have been blogging for a while now, and my current blog has been on the home page of Digg and other social media sites, has thousands of subscribers and gets tens of thousands of visitors per month.

Thanks,
Mike