Preparing a formal written plan imposes needed discipline on the entrepreneur and the management team. In order to prepare a written statement about market-
ing strategy, for example, the entrepreneur and the team must perform some type of market research. Likewise, a study of financial needs requires a review of projected sales and expenditures, month by month. Otherwise, even a good opportunity is likely to fail because of negative cash flows. In short, business plan preparation forces an entrepreneur to exercise greater discipline during the startup process.
Finally, a business plan can be effective in selling the new venture to those within the company. It provides a structure for communicating the entrepreneur's mission to current—and prospective—employees of the firm.
Remember, though, that the business plan, no matter how essential, is not the business. A good plan does not guarantee a good business. Building a good business involves much more.