(This is number one, the most important, on my list of the top 10 startup mistakes. This is the big one.)

The hardest business meeting I’ve ever been in was an Apple Computer strategy meeting in the early 1990s, when a group of us sat together trying to figure out how–meaning to whom–to sell the Apple Newton.

If you remember the Newton, it’s an interesting case example. The need was there–the success of the Palm Pilot just a few years later proved it. The Newton, however, didn’t meet the need. Its handwriting recognition was poor, it weighed about a pound, and it sold for almost $1,000. When the Palm Pilot came along about four years later, it had decent handwriting recognition, was about a third as big and cost about a third as much. Needs were met.

When you start looking at the research, studying why businesses fail, a lot of the reasons that turn up are really the result of no real need. Poor sales, expenses outpacing sales, failure to collect receivables . . . problems that wouldn’t be problems if more people wanted what these businesses were selling.

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Tim BerryTim Berry
Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry.