A beta reader is a non-professional reader who reads a written work, generally fiction, with the intent of looking over the material to find and improve elements such as grammar and spelling, as well as suggestions to improve the story, its characters, or its setting. Beta reading is typically done before the story is released for public consumption. Beta readers are not explicitly proofreaders or editors, but can serve in that context.
Elements highlighted by beta readers encompass things such as plot holes, problems with continuity, characterisation or believability; in fiction and non-fiction, the beta might also assist the author with fact-checking. Wikipedia
ALL writers need outside critique of their work. It is a fact that a writer can seldom edit and proofread his own work. A writer often falls in love with his or her words and plots and is unable to let them go.
Beta readers differ from Critique groups in that they usually read on their own and evaluate a book according to their individual experience. Unlike using an editor, those who choose to use Beta readers, usually find them due to their interest in a specific genre and they usually use more than one.
One of the most beneficial things about using a Beta reader is the cost. Most Beta readers read in exchange of favors with other writers.
Stephanie at Layered Pages has been conducting interviews with authors about their thoughts and experiences with Beta readers. This is very helpful information- be sure to check out what these authors have to say: