We need to be able to validate the feasibility of a business concept before we jump in with both feet. While some people will get lucky and succeed when doing this it is often those who have the financial backing to make it through lean times and punch through the fact that there are numerous other competitors that have established footholds. Breaking into a market that already has several established brands can be very difficult with either a lot of financial backing or having a product that truly sets you apart from the competition.
Knowing how easy it will be to advertise for a fledgling business can be important as well. If you go into launching a business and think that your advertising is going to bring you all of your clients but later find that you can’t afford to reach your potential audience then you won’t get anywhere. Cash flow is one of the easiest ways to kill of a business before it really has chance to get going.