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Business Problem Statement Explained with Examples

Free Problem Statement Templates

• July 26, 2024

Running a business is an extremely tedious task. Almost always, there’s a problem or two that needs your immediate attention. Addressing these problems head-on to find their solutions is a part of the process.

Luckily, there’s a tool that can help you with that: a business problem statement .

You may know how necessary it is to write a business plan for your company. What you may not know of, however, are the tools and techniques that can help you solve your business problems.

A business problem statement can help analyze the problem and come up with new and creative ways to solve it.

Essentially, it enables you to approach the problem in a more systematic, measurable, and objective way.

In this article, we will see what is a business problem statement and how you can write one yourself.

Table of Contents

• What is a business problem statement?
• How to write a business problem statement?
• How to develop a business problem statement?
• Business problem statement framework
• Business problem statement templates
• Business problem statement example

What is a Business Problem Statement?

A business problem statement states the problem that a company is facing. Also, it involves an intricate analysis of the problem, details relevant to the situation, and a solution that can solve the problem. This is a simple yet effective way to present a problem and its solution concisely.

In other words, it is a communication tool that helps you visualize and minimize the gap between what’s ideal vs. what’s real. Or to put it in business lingo, the expected performance, and the real performance.

How to Write a Business Problem Statement?

Before writing a business problem statement, it is crucial to conduct a complete analysis of the problem and everything related. You should know everything about the problem to describe it clearly and also suggest a solution to it.

To make things easy for you, we have explained the four key elements to help you write your business problem statement. They include:

1. Define the problem

Defining the problem is the primary aspect of a business problem statement. Summarize your problem in simple and layman’s terms. It is highly recommended to avoid industrial lingo and buzzwords.

Support your summary with insights from both internal and external reports to add credibility and context. Write a 3-5 sentence long summary, avoid writing more than it.

For example: “The manual auditing process is causing delays and errors in our finance department, leading to increased workload and missed deadlines.”

2. Provide the problem analysis

Here, explain the background of the problem. Add relevant statistics and results from surveys, industry trends, customer demographics, staffing reports, etc, to help the reader understand the current situation. These references should describe your problem and its effects on various attributes of your business.

Avoid adding too many stats in your problem statement, and include only the necessary ones. It’s best to include no more than three significant stats.

3. Propose a solution

Your business problem statement should conclude with a solution to the previously described problem. The solution should describe how the current state can be improved.

The solution must not exceed two sentences. Also, avoid including elaborate actions and steps in a problem statement, because it will lead to the solution looking messy. These can be further explained when you write a project plan.

4. Consider the audience

When you start writing your business problem statement, or any formal document, it is important to be aware of the reader. Write your problem statement considering the reader’s knowledge about the situation, requirements, and expectations.

While your gut feeling can be helpful, focusing on facts and research will lead to better solutions. If the readers are unfamiliar with the problem’s context, ensure you introduce it thoroughly before presenting your proposed solutions.

How to Develop a Business Problem Statement

A popular method that is used while writing a problem statement is the 5W2H (What, Why, Where, Who, When, How, How much) method. These are the questions that need to be asked and answered while writing a business problem statement.

Let’s understand them in detail.

• What: What is the problem that needs to be solved? Include the root cause of the problem. Mention other micro problems that are connected with the macro ones.
• Why: Why is it a problem? Describe the reasons why it is a problem. Include supporting facts and statistics to highlight the trouble.
• Where: Where is the problem observed? Mention the location and the specifics of it. Include the products or services in which the problem is seen.
• Who: Who is impacted by this problem? Define and mention the target audience, staff, departments, and businesses affected by the problem.
• When: When was the problem first observed? Talk about the timeline. Explain how the intensity of the problem has changed from the time it was first observed.
• How: Describe how the problem is observed. Include signs or symptoms of the problem and discuss the observations you made during your analysis.
• How much: How often is the problem observed? If you have identified a trend during your research, mention it. Comment on the error rate and the frequency and magnitude of the problem.

Business Problem Statement Framework

A problem statement consists of four main components. They are:

• The problem: The problem statement begins with mentioning and explaining the current state.
• Who it affects: Mention the people who are affected by the problem.
• How it impacts: Explain the impacts of the problem.
• The solution: Your problem statement ends with a proposed solution.

Business Problem Statement Templates

Below is a common template used for writing a problem statement. It includes the four key components mentioned in the above framework.

Template 1:

The problem of ________________, affects ___________________, the impact of which is __________________, so an apt solution for this is __________________.

Template 2:

Template 3:

Business problem statement examples.

Here are a few problem statement examples to help you understand how to write your business problem statement:

Example 1: A problem statement by a software company

The problem of a manual auditing process affects the finance department and the staff as the process creates a lot of hassle because of the searching and verifying of physical documents.

The impact of this is a lengthy auditing process where many mishaps and misplacements of documents happen. A successful solution would be to create an online database with search filters that would make it easy to find and verify documents.

Example 2: A problem statement by a manufacturing company

The problem of an inefficient manual assembly process affects the productivity of the company, and the workers have to manually install some parts, which consumes more time.

This impacts the production goals and incremental loss for this year. An efficient solution would be to install conveyor belts to optimize the manufacturing process.

Solve Problems Faster with a Business Problem Statement

Writing a problem statement can be tricky. However, building one can help you define the problems and find solutions faster.

It even helps you present a concise but detailed way description of the problem and its potential solutions.

Use the above template given by Upmetrics to create a problem statement for your business and eliminate the need to go through complex documents.

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with step-by-step Guidance & AI Assistance.

Frequently Asked Questions

How do i identify the root cause of a problem.

To identify the root cause of a problem, start by asking “Why?” multiple times (typically five times) to dig deeper into the issue. Each answer should lead you to the next question. This helps you move past the symptoms and get to the underlying cause.

How do I prioritize issues when crafting multiple problem statements?

Prioritize issues by using an Impact vs. Urgency Matrix to identify high-impact and urgent problems or by applying Pareto Analysis to focus on the top 20% of issues causing 80% of the impact. Consider stakeholder input, feasibility, and risk assessments to refine your priorities.

Can a problem statement change over time, and how do I manage this?

Yes, a problem statement can change as new information and insights emerge. Manage this by regularly reviewing and updating the problem statement to reflect the current situation, ensuring it remains relevant and accurate.

What are the next steps after writing a problem statement?

After writing problem statements, the next steps include conducting a thorough analysis of the problem, brainstorming potential solutions, evaluating these solutions based on feasibility and impact, developing an action plan, and implementing the chosen solution. Finally, monitor the results and make adjustments as necessary.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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50 Business Problem Statement Examples [+Tips To Write]

Editorial Team

Whether you are a budding entrepreneur or a seasoned one, you need to have insights into what a problem statement for a business is, its examples, how to write it, and any other information about it.

When workplace staff members and departmental teams express initiative in solving problems, they demonstrate competence in handling complex and unanticipated challenges at work. Businesses rely on individuals and teams that can effectively analyze challenges and propose working solutions.

In this article, we offer tips on how to generate problem statements, with 50 comprehensive business examples you can use for reference.

What’s The Meaning Of A Problem Statement? 

 A problem statement summarizes a challenge that needs timely intervention to help improve a situation. It summarizes the problem in business, why it is a problem and how to address it. Businesses thrive when they can solve potential and existing customers’ issues.

Pointers On How To Write A Problem Statement 

A problem statement must be accurate and precise. There are vital components to consider when crafting a problem statement that can positively impact a project’s outcome. These include:

1. A Description Of How Things Should Work

First, provide some context that will make it easier to understand the problem by explaining how this process is supposed to function and work. Mention the problem while keeping the end-user in mind.

2. An Overview Of What The Problem Is And Explaining Its Impact

A practical problem statement should address a problem stating what it is, why it is a problem, and the benefits of solving it. It reveals who the problem affects and why it needs fixing. You could indicate any attempts you have undertaken to fix the problem and why those attempts did not work. Explain in detail your understanding of the problem at hand. Usually, fixing a problem in a business setup will help improve efficiency in the workflow processes, save time, minimize the wastage of resources, and impact the cost.

3. An Explanation Of The Cost Implications

When you explain the problem to critical stakeholders, mention the cost implications of not addressing the issue. Entrepreneurs understand the money language better, so framing the problem and projected solution regarding financial consequences is easier. Try to be specific by pinpointing exact figures of how much the business will lose if the issue remains unresolved and how much the business will save by implementing a workable solution. The problem of wasting resources or preventing the company from maximizing profits should reflect in the problem statement.

4. Evidence To Support Your Theory 

After stating the financial implications, you need to support your claims with evidence if the stakeholders are to take you seriously. You must conduct comprehensive research, cite your sources, and give practical examples. You must have relevant data to present if the need arises.

5. Suggestions For The Solutions 

A problem statement should propose a detailed solution to the problem. At this juncture, you need to have a firm grasp of where the challenges are arising from and offer practical approaches to mitigate them. You must outline your objectives by suggesting an ingenious strategy for addressing challenges.

6. Benefits Of Your Suggested Solutions 

After pinpointing the problem:

• Explain the ramifications of not fixing these setbacks and propose appropriate solutions.
• Demonstrate this by focusing on efficiency and the financial impact the solution will have helps convince stakeholders of the viability of the problem statement.
• Comprehensively outline how the solution will impact finances by increasing revenue streams, reducing expenses, improving productivity, saving time, and increasing profit margins.    

7. A Summary Of The Problem And The Expected Solution 

In conclusion, you must summarize the problem, explain why it needs fixing, and provide an overview of why your solution is the best.

50 Business Problem Statement Examples  

1. social media channel.

While Mark Zuckerberg was studying, Harvard had its version of Facebook. Though it was possible to search other students’ profiles on the university wall, it was not possible to interact and perform any social interaction by liking, commenting, or networking. 

Problem:  The logistics of trying to connect, network, and interact with like-minded friends without physically having to travel.

“Human beings are social beings. They would love to interact and network with people in faraway places without physically traveling. People love to socialize but hate having to spend to do it.”

Solution:  Facebook allows its audience to search and network with like-minded individuals.

2. Manufacturing 

Problem:  An inefficient manual assembly process that consumes plenty of time affects productivity as employees have to spend hours manually installing machine parts. The long delays negatively impact production goals as you could spend that time developing products is spent fixing faulty machines.

Solution:  Automating assembly processes and installing conveyor belts to optimize manufacturing workflows.

Problem Statement:  Rigorous labor-intensive processing due to manual paperwork management.

3. Streaming Entertainment Service Company

Netflix, Hulu, and other streaming services came to solve the problem of people having to go to video stores to rent movies. They did this by trying to eliminate video stores and delivering movies to customers allowing them to keep those movies for as long as they needed. For this, their problem statement would be similar to this one:

“Clients detest going to a video store. They don’t like traveling back and forth and they hate paying late fees even more.” An interpretation of the problem statement is:  

Problem: Going to the store entails fighting through traffic and waiting in queues for your turn to get the movies you want.

Solution: The streaming service allows customers to enjoy numerous movies streamed directly to their mailbox. In this short statement, you have given an investor a simplified view of the problem and its solution. Grand problem statements focus on issues so the audience can identify with that problem and appreciate the solution the business is trying to come up with.

4. Software Company

Problem: Manual auditing delays processes in the finance department due to the cumbersome process of verifying and counterchecking financial statements, searching for documents for reference, and manually collaborating with different teams is negatively affecting productivity. The lengthy auditing process leads to many errors where documents get misplaced or lost, and it takes a lot of time to locate and retrieve them.

Solution:  An online database with search filters that simplifies the process of searching for documents.

5. Busy Office 

Process:  Forms for different functions like annual, sick or emergency leave need to be filled by employees for review and management approval. Human resource teams must scrutinize the forms, verify, scan, and upload them to the system. After that, the papers move to the finance department for manual re-entry, and payroll preparation begins.

Problem:  Overdependence on the manual system leads to irregularities, delays, omissions, and mistakes in service delivery to employees and vendors. This promotes a poor organizational response to arising issues and wastes precious time trying to identify and correct errors.

Solution:  Automating repetitive processes to help teams concentrate on the core business.

6. Engineering 

Problem:  Manual transportation of machine parts from one assembly line to the next, leading to inefficiencies making it impossible to meet the yearly production goals despite hiring additional staff.

Solution:  To minimize manual transportation of machine parts and increase reliance on mechanical robot arms and conveyor belts that appear between assembly lines. Such a move will prevent employees from walking back and forth across the assembly lines.  

Problem Statement:  Employee Efficiency to Improve Productivity

7. Healthcare Center

A medical facility operates 24/7 as patients need care round the clock.

Problem: There’s an insufficiency of medical personnel, especially on the night shift, which presents challenges during emergencies. Unfortunately, patients must wait hours for medical assistance, leading to inefficiencies.

Solution: The hospital must always have a medic on call to handle each department to prevent patients from being stranded during emergencies. Hiring part-time staff for the night shift will help alleviate the problem.

8. Cosmetics 

Problem Statement:  Customer dissatisfaction with skin care products for Caucasian skin

Problem:  Customers complain about the harshness of the sunblock cream.

Impact: Mistrust and suspicion about the quality of the products.

Solution: Product recall as it needs more analysis and tests.  

9. Ecommerce Business 

Problem Statement : Sales Quote Output

The quote generation display is critical as sales teams must swiftly generate quotes for customers to make their payments on time.

Problem : The quote generation display in the sales app is faulty, with sales teams complaining that the screen is prone to errors and consumes plenty of time to make it function. These issues have led to lost productivity in the sales department.

Solution : The department needs app improvements by replacing or upgrading existing software. 

10. Business Startup

Problem Statement : Inefficient customer data security

Problem : storing customer data in separate data stores with questionable encryption security practices presents operational risks and substantial reputational challenges.

Solution : Enlist the services of an IT expert to help improve the process of storing customer data.

11. Consultancy Firm 

Problem Statement:  Sales Software Outage

Problem:  Collapsing of the manual and automatic communication software for an extended period causes a communication breakdown. One section of the app experienced an outage that the mechanical system failed to pick up. Technicians tried the manual option but experienced error notifications a couple of times. The manual and automatic processes could not redirect calls to the API in a timely process leading to miscommunication and a loss in productivity. The setback arose during core business hours which had a massive negative impact on sales.

Solution : The outage could have been managed if the problem had been detected with API calls being redirected to a different location.

12. SaaS Company

Problem : Users of our software have challenges using it as they have to manually transfer information into the CRM after sending proposals. They need the CRM to track emails, phone calls, and other conversations that involve customer interactions. Without CRM integration, the software causes a frustrating experience for software users.

Solution : Send segmented surveys to determine the most effective CRMs to integrate and customize these integrations to improve user experience.

Problem Statement : Saas platform with an AI assistant for recruiters.

13. Recruitment Firms 

Hiring teams experience numerous repetitive hiring tasks, including vetting applications, scheduling or rescheduling interviews, handling cancellations, responding to concerns, and shortlisting applicants at various application stages.

Problem:  Plenty of tedious, monotonous manual work takes away the joy of meeting and assessing applicants that perfectly fit job descriptions.

Solution : Utilizing artificial intelligence technology or software applications that automate these processes.

14. Employee Management 

Problem:  Our organization needs a more secure way of onboarding and offboarding employees because the current system is cumbersome. Hiring managers have to depend on security teams to perform the same tasks.

Solution:  automating repetitive onboarding and offboarding processes.

15. Learning Institutions

Problem Statement:  Motivation for resolving tech issues Our school needs a work-from-home policy that allows staff to operate remotely.

Problem:  Our inexperience is causing us anxiety as we may lose competent staff to our more organized competitors.

Solution:  provide our teams with adequate tools and devices to protect the security of our data when staff operate remotely. We must provide secure access to cloud computing software and communication channels like Zoom or Microsoft Teams. Learning to use collaboration software will be a mandatory skill for staff.  

16. Real Estate

Problem:  Despite our real estate company’s decision to benchmark for free trial sign-ups that have remained steady, our paid subscriptions declined in the last few weeks. This means our business isn’t experiencing a traffic setback but a conversion challenge caused by a rise in mortgage interest rates, widespread economic challenges, pricing, and workflow processes.

Solution:  Restructure the free trial to offer less value because users gain too much from the free plan, which prevents them from signing up for a paid plan. Currently, users must sign up for a paid plan to access leads of real estate deals. We should also upgrade our software to include additional features that will retain investors on our platform.

17. Software Application 

Problem:  Users of our newspaper app avoid sharing content through the app and instead export the content from the app. This poses a challenge in our marketing strategy because potential customers need to be made aware that the content shared originates from our app leading to lower conversion rates. It also poses a challenge for app users as exporting range is time-consuming and could decrease app usage.  

18. Sales Strategies

Problem: Sales reps conduct manual planning using Excel spreadsheets and typed printout lists. They need more time which leads to difficulty in meeting targets. It also causes challenges in knowing which targets to visit, which affects sales and the inability to meet set goals.

19. Customer Care

Problem:  customers call the contact center seeking updates on their applications. Due to the vast volume, many applicants wait long hours to speak to an agent because the call center is understaffed. Employees are ill-equipped and lack adequate access to applicants’ track records, further compounding the backlog. The outcome leads to a frustrating experience for both applicants and staff. 

Problem Statement:  Using project management software for collaboration improves efficiency and productivity.

20. Problem:  Communication breakdown caused by overreliance on an inefficient manual system.

Solution:  Introducing technology by integrating a reliable project management system.

21. Problem Statement:  Stay-at-home-mums need an avenue to feel connected to a support group as they spend long periods alone.

Solution:  An app or social media channel where these mums can interact and network while attending to their babies.

22. Digital Transformation

Problem Statement:  Customers need a solution to help them create websites without overreliance on IT experts.

Problem:  People detest contacting IT specialists as the process is cumbersome.

Solution:  Apps that offer guidance to web users in creating simple websites.

23. Agricultural Firm 

Problem Statement:  Preserving perishables to minimize wastage.

Problem:  Though Jack& Jill Farms provides products to many supermarkets across the country, they consistently experience a loss due to their limited storage capacity and the fact that most of their products are highly perishable.

Solution:  Maintain an efficient supply chain to guarantee a ready market once the product leaves the farms. The firm must invest in modern storage facilities to improve preservation and shipping. 

24. Waste Management 

Problem Statement : Conduct a study on the proper waste management system.

Problem:  Manufacturing firms in my area are releasing industrial chemicals into the river leading to environmental degradation.

Solution:  Present a research proposal to the city authorities requesting permission to conduct a proper waste management system analysis and devise a viable solution.

25. Virtual Assistant 

Problem:  Challenges onboarding new clients, which lead to prolonged periods of idleness and a struggle to meet basic needs

Solution:  Integrating new technology in marketing and creating awareness for the business.  

Other examples of problem statement ideas include:

26. Problem:  Fierce competition

Solution:  Market the business online and offline using technology and modern strategies.

27. Problem:  Unrealistic expectations 

Solution:  Manage expectations by setting realistic goals.

28. Problem:  Challenges in hiring suitable candidates

Solution:  Shortlist suitable applicants and review each application noting an applicant’s experience level and skills.

29. Problem:  Cyber security threats that lead to unauthorized access to sensitive data.

Solution:  Engaging the services of an IT expert.

30. Problem:  challenges in gaining client trust 

Solution: Develop healthy relationships to improve trust. 

31. Problem:  Financial setbacks 

Solution:  Engage the services of a financial expert who can help streamline cash flows and budgetary allocations and share helpful insights. 

32. Problem:  Uncertainty about the future and not being able to predict customer and market trends 

Solution:  Consulting the services of an expert who can predict essential trends.

33. Problem:  Resisting change. 

Solution:  Know when to embrace change by firing and hiring new staff or overhauling processes to improve efficiency.

34. Problem:  Employee retention

Solution:  Addressing employee challenges and offering incentives, and rewarding job performance

35. Problem : Lack of startup capital 

Solution:  Use locally available material, start small, and consistently plow profits into the business.

36. Problem:  Fluctuating prices due to inflation

Problem Statement:  Diversify and Optimize

Solution:  Altering business models to suit the current prevailing situation.

37. Problem: Administrative Workload 

Solution:  Outsourcing or hiring temporary staff to handle bookkeeping, repetitive tasks or automating workflows.

38. Problem: Time Management Challenges 

Solution:  Proper planning and organization by prioritizing and delegating tasks, especially those with short turnaround periods.

39. Problem: Marketing And Advertising Challenges

Solution:  Defining what strategies would work best by researching the market and identifying the ideal target market. From there, develop a plan that targets that group.

40. Problem: Low Business Leads To Client Over-Dependence 

Solution:  Diversify your client base to prevent closing the shop once a major client closes their account with you.

41. Problem: Indiscipline In Money Management 

Solution:  Learning good financial habits and disciplining oneself to stick to set rules. A business should have a diversified client base to cushion the company when a single client quits or defaults payments.

42. Problem: Work-Related Pressure Leading To Fatigue

Solution:  Most successful business owners fall into the habit of overworking, leading to burnout and fatigue. Success doesn’t mean slavery but the ability to integrate balance into one’s activities.

43. Problem: Founder Dependence 

Solution:  A business that stagnates without its founder is a business with a time limit.

44. Problem Statement: Balancing Growth And Quality

Problem:  sometimes, a business must sacrifice to scale up. This means that you may only be able to manage some client relationships personally.

Solution:  Navigate the process to allow growth without interfering with the brand.

45. Problem: Meeting Customer Demand

Solution:  Awareness of what the customer wants and prioritizing their needs

46. Problem:  Maintaining quality customer relations

Solution:  Consistency, patience, and nurturing healthy relationships

47. Problem:  Preserving a good reputation

The speed of information makes tracking your business’s public image challenging.

Solution:  Utilize software or companies that track social media for mentions of your company. With technology, you can get notifications about an arising issue and be able to address it immediately. 

48. Problem:  Marketing in a saturated marketplace 

Solution:  Market strategically using unique and compelling messages to attract potential clients

49. Problem:  Choosing the right tools 

Solution:  Identify the need and look for tools that help meet that specific need.

50. Problem: Globalization

Understanding foreign cultures are crucial to penetrating new markets with existing products or services.

Solution:  Altering designs to accommodate new markets

Conclusion 

Every successful company starts by creating a solution to a need, an important reason your business needs to have a problem statement. The better you articulate the problem, the more treasured your solution will be. Most companies make the mistake of not giving the problem as much importance as the solution. Instead, many entrepreneurs concentrate on the solution and completely forget to explain why the problem is essential. Before your business markets a solution to a problem, make sure your clientele is aware of the problem your business is solving, which is made clear through your problem statement. Comprehensively articulating a problem statement help in improving the effectiveness of your business.

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How to Create a Convincing Problem and Solution Statement

Makenna Crocker

10 min. read

Updated November 3, 2023

“Every sale a business makes is related to a problem. In every case, there is a story.” – Tim Berry

A powerful problem and solution statement should tell a story about your customers and the solution you provide. It’s how you position your business within your business plan . 

But crafting a short and compelling description of your problem and solution is easier said than done. This guide will walk you through the process. 

Why you need to describe the problem you’re solving

So you’ve got a solid business idea . That’s a great starting point, but it’s just that—a starting point. 

The key to moving forward is identifying a real-world problem your product or service aims to solve. This isn’t just a box to tick off; it has serious implications for your business. 

Here’s why:

1. Validate real-world demand

First, you need to show actual demand for your offering. This goes beyond mere speculation or gut feelings; you need tangible evidence that proves you have a viable solution. 

Example: If you’re planning on opening a gluten-free bakery, for instance, it’s not enough to say there’s a need for one—you should back it up with data.

2. Zero in on your ideal customer

Once you’ve established that a need exists, it’s time to get specific about who you’re targeting . Understanding who will benefit the most from your solution helps you fine-tune nearly every aspect of your business. 

Example: In the case of a gluten-free bakery, you’re not targeting just anyone who likes baked goods; you’re focusing on those with specific dietary needs or preferences.

3. Carve out your niche

Knowing the problem you’re solving gives you a leg up when positioning yourself in the market. This is where you find the gaps that competitors are missing and jump right in. 

Example: Maybe there are plenty of bakeries, but none have a robust gluten-free selection. That’s your territory; that’s how you stand out.

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4. Keep the team on the same page

A clearly defined problem serves as a guidepost for you and your team . It ensures that everyone knows what the goal is and stays aligned. Whenever there’s a question about what the business should focus on, you can always circle back to that original problem statement.

5. Make stakeholders take notice

A well-defined problem and solution make it easier for stakeholders like potential investors or partners to understand why your business is worth paying attention to. It’s one thing to offer up data; it’s another to weave that into a compelling narrative about why your business matters.

“Stories are the oldest and arguably best way to communicate ideas, truth, beliefs, and even numbers,” says Palo Alto Software founder and business planning expert Tim Berry.

“Stories are powerful… They resonate. We recognize their truths.”

Example:   You’re inspired to start a gluten-free bakery because of your niece, who has Celiac disease. Her limited dietary options make social events like birthday parties isolating for her. While some bakeries offer gluten-free items, they are often uninspired and don’t allow her to fully enjoy celebrations with her friends.

Your bakery aims to solve this by providing delicious, gluten-free sweet treats that kids and adults with gluten allergies can freely enjoy.

A well-articulated problem statement is crucial for attracting investors and business partners. Not only does it make them care about the problem you’re solving, but it also simplifies the process of writing your executive summary —the first thing lenders or investors are likely to read in your business plan.

• How to develop your problem and solution statement

Developing your problem and solution statement is an ongoing process, not a one-off task. And it’s not just a random explanation, but something that speaks to the core of why you started your business . 

So it’s important to arrive at a clear, succinct, and informative statement. To help develop a strong problem and solution statement, take the following steps:

Identify the problem

When it comes to identifying the problem your business solves, it’s crucial to understand the market you are targeting. You’ll do this by conducting market research . This is the process of gathering information about potential customers. 

It helps you find answers to questions like:

• Who are your customers?
• What is the size of your potential customer base?
• What are their shopping habits?

You’ll eventually get into deeper questions like:

• What struggles do these people face?
• What do they desire?
• What currently exists to help fix their problem?
• What would they be willing to pay?
• Are there other, more pressing problems?

After you’ve done the research necessary to reference your target market in your statement—you need to identify the problem . Consider things like:

• How much time, money, or mental anguish does this problem cause?
• Why is no one else solving it?
• How do people cope currently?

Example: With the gluten-free bakery, the problem is there are not enough local options for allergy-friendly fresh baked goods. Ask yourself questions like:

• Why hasn’t anyone started a gluten-free bakery already?
• What are people with gluten allergies doing to satisfy their sweet tooth?

Answering questions like these will help you explore all potential problems and narrow it down to the key elements of the real problem you’re solving.

Define your solution

By now, you should have a clear understanding of who your customers are, what problems they’re experiencing, and how others in the market are trying to solve those problems.

Now it’s time for your proposed solution. Earlier, we mentioned the importance of being able to define the unique value of your business. When you align that value with your customer’s problems, you have a unique value proposition – the thing that sets your solution apart in the eyes of your customers.

As you think about your solution, ask yourself:

• How does your product or service differ from others in the market?
• What makes it valuable?
• Why is it better than other solutions?

Answering these questions will help ensure that you can communicate the value of your business to your target market. After all, if you can’t communicate your value to your customers, they probably won’t see it, either.

• How to write your problem statement

After using your research to identify your problem, it’s time to turn that work into a well-crafted problem statement.

Start by boiling down the core issues you found in your research to pinpoint the most significant problem your business aims to solve.

This is where it can be really important to gather additional feedback beyond your own research. It could include getting feedback from potential customers , creating surveys, or even convening focus groups. These conversations will help ensure that you focus on a genuine problem people are experiencing.

When writing the problem statement, be sure to:

• Clearly and succinctly define the problem. Avoid jargon and complex language.
• Be precise in describing who the problem affects and what the implications are for them

Example: Circling back to our gluten-free bakery—a problem statement might look like this:

“There are no local gluten-free bakeries to serve the growing community of individuals with gluten intolerance. Instead, they’re forced to rely on major grocery store chains with limited selections of poor quality, highly processed baked goods.”

As you can see, the statement starts by generally reciting the problem. Within your business plan, supporting statistics from your market research will follow. For now, we’re sticking to the mechanics of writing the statement.

Make sure your problem statement directly aligns with the solution your business offers. It’s also important to highlight how addressing this problem sets your business apart from competitors.

Be sure to also seek feedback on your problem statement from stakeholders, potential customers, or a mentor to ensure it accurately represents the issue.

• Sell your solution

“The problem is half the story; the solution is the other half. It’s the shoe waiting to drop.” – Tim Berry

You need your solution to hold as much weight as the problem. 

So what does it mean to sell your solution? Think about your elevator pitch – you have just a moment to explain how your solution solves a problem in the market. It can’t be convoluted or complex, even if the actual solution is to some degree.

Your solution statement should address how your product or service addresses the core issue or issues raised by the problem statement. It also needs to be grounded in reality – don’t promise a grand solution that you can’t actually deliver on.

Just like with the problem statement, keep the solution statement clear and simple. Using the gluten-free bakery example, you could say: “Our bakery provides a wide range of fresh, locally made gluten-free products to satisfy the cravings and meet the dietary needs of customers with gluten intolerance.”

Let’s look at a real-life example. When the video streaming giant Netflix launched in the late 1990s, it explained its problem and solution statement this way :

Problem: “Going to the video store requires fighting traffic, wandering the aisles, and waiting in long lines just to get a single movie.”

Solution: “Netflix allows anyone to enjoy thousands of titles… delivered to their mailbox.”

Now let’s apply the idea to our bakery example:

Problem: “The area does not have a local spot that offers a wide variety of quality and appealing gluten-free baked goods for those with allergies and intolerances.”

Solution: “Our bakery specializes in beautifully decorated and tasty gluten-free baked goods, so no one misses out on the chance to indulge.”

You’ve already illustrated the target demographic’s pain points in your problem, and your solution clearly explains exactly how you are helping them.

Craft and refine

Now it’s time to edit and perfect your problem and solution statement. Be critical of your own work. Here are some questions to ask yourself: 

• If you show the problem and solution statement to your friends or family, can they understand what your business does and get the problem?
• Can you easily remember and recite the statement?
• Is your statement as short as can be? (Tip: focus on making it 3 sentences or less.)
• Would this statement work in ads or on your business website ?
• Problem and solution statement examples

Sometimes, you don’t know what works for you until you are given some samples. Below are some product and solution statement examples to help visualize your final statement. Feel free to copy and rework them for your own business!

Mobile dog groomer example:

Problem: Many dog owners cannot take their dogs to a groomer due to mobility issues, busy schedules, or location.

Solution: Our mobile dog groomer service goes directly to the client, allowing them to stay home while their dog is groomed right outside.

Fertility clinic app example:

Problem: Individuals and couples seeking fertility care struggle to find information on nearby clinics offering the treatment they seek.

Solution: Our fertility clinic app allows users to enter their location and the treatment they are looking for and generates an interactive map that details clinics in and around their area that specialize in their needs.

Home loan company example:

Problem: Recent hikes in interest rates have led to a decline in home purchases, adversely affecting both mortgage companies and potential home buyers.

Solution: Our home loan company introduces a tailored refinancing program that provides existing homeowners with more manageable repayment terms while also assisting prospective buyers in securing mortgage loans with favorable rates to make it easier for individuals looking to sell their current home to purchase a new one.

• Start your business plan

Crafting a compelling problem and solution statement is not just a task – it speaks to why you decided to get into business and is one of the most important sections of your business plan. 

If you are ready to get started on your business plan, you have access to over 550 free business plan examples from the Bplans library. 

Download your free business plan template today to get started!

Makenna Crocker is the Marketing Specialist at Richardson Sports. Her work focuses on market and social trends, crafting gripping and authentic content, and enhancing marketing strategy to foster stronger B2B and B2C relationships. With a master’s degree in Advertising and Brand Responsibility from the University of Oregon, she specializes in generating a strong and responsible brand presence through content that positively influences and inspires others.

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3 Problem statement examples and steps to write your own

We’ve all encountered problems on the job. After all, that’s what a lot of work is about. Solving meaningful problems to help improve something. 

Developing a problem statement that provides a brief description of an issue you want to solve is an important early step in problem-solving .

It sounds deceptively simple. But creating an effective problem statement isn’t that easy, even for a genius like Albert Einstein. Given one hour to work on a problem, he’d spend 55 minutes thinking about the problem and five minutes finding solutions. (Or so the story goes.)

Einstein was probably exaggerating to make a point. But considering his success in solving complex problems, we think he was on to something. 

As humans, we’re wired to jump past the problem and go directly to the solution stage. In emergencies, this behavior can be lifesaving, as in leaping out of the way of a speeding car. But when dealing with longer-range issues in the workplace, this can lead to bad decisions or half-baked solutions. 

That’s where problem statements come in handy. They help to meaningfully outline objectives to reach effective solutions. Knowing how to develop a great problem statement is also a valuable tool for honing your management skills .

But what exactly is a problem statement, when should you use one, and how do you go about writing one? In this article, we'll answer those questions and give you some tips for writing effective problem statements. Then you'll be ready to take on more challenges large and small.

What is a problem statement?

First, let’s start by defining a problem statement. 

A problem statement is a short, clear explanation of an issue or challenge that sums up what you want to change. It helps you, team members, and other stakeholders to focus on the problem, why it’s important, and who it impacts. 

A good problem statement should create awareness and stimulate creative thinking . It should not identify a solution or create a bias toward a specific strategy.

Taking time to work on a problem statement is a great way to short-circuit the tendency to rush to solutions. It helps to make sure you’re focusing on the right problem and have a well-informed understanding of the root causes. The process can also help you take a more proactive than reactive approach to problem-solving . This can help position you and your team to avoid getting stuck in constant fire-fighting mode. That way, you can take advantage of more growth opportunities.  

When to use a problem statement

The best time to create a problem statement is before you start thinking of solutions. If you catch yourself or your team rushing to the solution stage when you’re first discussing a problem, hit the brakes. Go back and work on the statement of the problem to make sure everyone understands and agrees on what the real problem is. 

Here are some common situations where writing problem statements might come in handy: 

• Writing an executive summary for a project proposal or research project
• Collaborating   on a cross-functional project with several team members
• Defining the customer issue that a proposed product or service aims to solve
• Using design thinking to improve user experience
• Tackling a problem that previous actions failed to solve 

How to identify a problem statement

Like the unseen body of an iceberg, the root cause of a specific problem isn’t always obvious. So when developing a problem statement, how do you go about identifying the true, underlying problem?

These two steps will help you uncover the root cause of a problem :

• Collect information from the research and previous experience with the problem
• Talk to multiple stakeholders who are impacted by the problem

People often perceive problems differently. Interviewing stakeholders will help you understand the problem from diverse points of view. It can also help you develop some case studies to illustrate the problem. 

Combining these insights with research data will help you identify root causes more accurately. In turn, this methodology will help you craft a problem statement that will lead to more viable solutions. 

What are problem statements used for?

You can use problem statements for a variety of purposes. For an organization, it might be solving customer and employee issues. For the government, it could be improving public health. For individuals, it can mean enhancing their own personal well-being . Generally, problem statements can be used to:

• Identify opportunities for improvement
• Focus on the right problems or issues to launch more successful initiatives – a common challenge in leadership
• Help you communicate a problem to others who need to be involved in finding a solution
• Serve as the basis for developing an action plan or goals that need to be accomplished to help solve the problem
• Stimulate thinking outside the box  and other types of creative brainstorming techniques

3 examples of problem statements

When you want to be sure you understand a concept or tool, it helps to see an example. There can also be some differences in opinion about what a problem statement should look like. For instance, some frameworks include a proposed solution as part of the problem statement. But if the goal is to stimulate fresh ideas, it’s better not to suggest a solution within the problem statement. 

In our experience, an effective problem statement is brief, preferably one sentence. It’s also specific and descriptive without being prescriptive. 

Here are three problem statement examples. While these examples represent three types of problems or goals, keep in mind that there can be many other types of problem statements.        

Example Problem Statement 1: The Status Quo Problem Statement

Example: 

The average customer service on-hold time for Example company exceeds five minutes during both its busy and slow seasons.

This can be used to describe a current pain point within an organization that may need to be addressed. Note that the statement specifies that the issue occurs during the company’s slow time as well as the busy season. This is helpful in performing the root cause analysis and determining how this problem can be solved. 

The average customer service on-hold time for Example company exceeds five minutes during both its busy and slow seasons. The company is currently understaffed and customer service representatives are overwhelmed.

Background:

Example company is facing a significant challenge in managing their customer service on-hold times. In the past, the company had been known for its efficient and timely customer service, but due to a combination of factors, including understaffing and increased customer demand, the on-hold times have exceeded five minutes consistently. This has resulted in frustration and dissatisfaction among customers, negatively impacting the company's reputation and customer loyalty.

Reducing the on-hold times for customer service callers is crucial for Example company. Prolonged waiting times have a detrimental effect on customer satisfaction and loyalty, leading to potential customer churn and loss of revenue. Additionally, the company's declining reputation in terms of customer service can have a lasting impact on its competitive position in the market. Addressing this problem is of utmost importance to improve customer experience and maintain a positive brand image.

Objectives:

The primary objective of this project is to reduce the on-hold times for customer service callers at Example company. The specific objectives include:

• Analyzing the current customer service workflow and identifying bottlenecks contributing to increased on-hold times.
• Assessing the staffing levels and resource allocation to determine the extent of understaffing and its impact on customer service.
• Developing strategies and implementing measures to optimize the customer service workflow and reduce on-hold times.
• Monitoring and evaluating the effectiveness of the implemented measures through key performance indicators (KPIs) such as average on-hold time, customer satisfaction ratings, and customer feedback.
• Establishing a sustainable approach to maintain reduced on-hold times, taking into account both busy and slow seasons, through proper resource planning, training, and process improvements.

Example Problem Statement 2: The Destination Problem Statement

Leaders at Example company want to increase net revenue for its premium product line of widgets by 5% for the next fiscal year. 

This approach can be used to describe where an organization wants to be in the future. This type of problem statement is useful for launching initiatives to help an organization achieve its desired state. 

Like creating SMART goals , you want to be as specific as possible. Note that the statement specifies “net revenue” instead of “gross revenue." This will help keep options open for potential actions. It also makes it clear that merely increasing sales is not an acceptable solution if higher marketing costs offset the net gains. 

Leaders at Example company aim to increase net revenue for its premium product line of widgets by 5% for the next fiscal year. However, the company currently lacks the necessary teams to tackle this objective effectively. To achieve this growth target, the company needs to expand its marketing and PR teams, as well as its product development teams, to prepare for scaling. 

Example company faces the challenge of generating a 5% increase in net revenue for its premium product line of widgets in the upcoming fiscal year. Currently, the company lacks the required workforce to drive this growth. Without adequate staff in the marketing, PR, and product development departments, the company's ability to effectively promote, position, and innovate its premium product line will be hindered. To achieve this kind of growth, it is essential that Example company expands teams, enhances capabilities, and strategically taps into the existing pool of loyal customers.

Increasing net revenue for the premium product line is crucial for Example company's overall business success. Failure to achieve the targeted growth rate can lead to missed revenue opportunities and stagnation in the market. By expanding the marketing and PR teams, Example company can strengthen its brand presence, effectively communicate the value proposition of its premium product line, and attract new customers.

Additionally, expanding the product development teams will enable the company to introduce new features and innovations, further enticing existing and potential customers. Therefore, addressing the workforce shortage and investing in the necessary resources are vital for achieving the revenue growth objective.

The primary objective of this project is to increase net revenue for Example company's premium product line of widgets by 5% in the next fiscal year. The specific objectives include:

• Assessing the current workforce and identifying the gaps in the marketing, PR, and product development teams.
• Expanding the marketing and PR teams by hiring skilled professionals who can effectively promote the premium product line and engage with the target audience.
• Strengthening the product development teams by recruiting qualified individuals who can drive innovation, enhance product features, and meet customer demands.
• Developing a comprehensive marketing and PR strategy to effectively communicate the value proposition of the premium product line and attract new customers.
• Leveraging the existing base of loyal customers to increase repeat purchases, referrals, and brand advocacy.
• Allocating sufficient resources, both time and manpower, to support the expansion and scaling efforts required to achieve the ambitious revenue growth target.
• Monitoring and analyzing key performance indicators (KPIs) such as net revenue, customer acquisition, customer retention, and customer satisfaction to measure the success of the growth initiatives.
• Establishing a sustainable plan to maintain the increased revenue growth beyond the next fiscal year by implementing strategies for continuous improvement and adaptation to market dynamics.

Example Problem Statement 3 The Stakeholder Problem Statement

In the last three quarterly employee engagement surveys , less than 30% of employees at Eample company stated that they feel valued by the company. This represents a 20% decline compared to the same period in the year prior. 

This strategy can be used to describe how a specific stakeholder group views the organization. It can be useful for exploring issues and potential solutions that impact specific groups of people. 

Note the statement makes it clear that the issue has been present in multiple surveys and it's significantly worse than the previous year. When researching root causes, the HR team will want to zero in on factors that changed since the previous year.

In the last three quarterly employee engagement surveys, less than 30% of employees at the Example company stated that they feel valued by the company. This indicates a significant decline of 20% compared to the same period in the previous year.

The company aspires to reduce this percentage further to under 10%. However, achieving this goal would require filling specialized roles and implementing substantial cultural changes within the organization.

Example company is facing a pressing issue regarding employee engagement and perceived value within the company. Over the past year, there has been a notable decline in the percentage of employees who feel valued. This decline is evident in the results of the quarterly employee engagement surveys, which consistently show less than 30% of employees reporting a sense of value by the company.

This decline of 20% compared to the previous year's data signifies a concerning trend. To address this problem effectively, Example company needs to undertake significant measures that go beyond superficial changes and necessitate filling specialized roles and transforming the company culture.

Employee engagement and a sense of value are crucial for organizational success. When employees feel valued, they tend to be more productive, committed, and motivated. Conversely, a lack of perceived value can lead to decreased morale, increased turnover rates, and diminished overall performance.

By addressing the decline in employees feeling valued, Example company can improve employee satisfaction, retention, and ultimately, overall productivity. Achieving the desired reduction to under 10% is essential to restore a positive work environment and build a culture of appreciation and respect.

The primary objective of this project is to increase the percentage of employees who feel valued by Example company, aiming to reduce it to under 10%. The specific objectives include:

• Conducting a comprehensive analysis of the factors contributing to the decline in employees feeling valued, including organizational policies, communication practices, leadership styles, and cultural norms.
• Identifying and filling specialized roles, such as employee engagement specialists or culture change agents, who can provide expertise and guidance in fostering a culture of value and appreciation.
• Developing a holistic employee engagement strategy that encompasses various initiatives, including training programs, recognition programs, feedback mechanisms, and communication channels, to enhance employee value perception.
• Implementing cultural changes within the organization that align with the values of appreciation, respect, and recognition, while fostering an environment where employees feel valued.
• Communicating the importance of employee value and engagement throughout all levels of the organization, including leadership teams, managers, and supervisors, to ensure consistent messaging and support.
• Monitoring progress through regular employee surveys, feedback sessions, and key performance indicators (KPIs) related to employee satisfaction, turnover rates, and overall engagement levels.
• Providing ongoing support, resources, and training to managers and supervisors to enable them to effectively recognize and appreciate their teams and foster a culture of value within their respective departments.
• Establishing a sustainable framework for maintaining high employee value perception in the long term, including regular evaluation and adaptation of employee engagement initiatives to address evolving needs and expectations.

What are the 5 components of a problem statement?

In developing a problem statement, it helps to think like a journalist by focusing on the five Ws: who, what, when, where, and why or how. Keep in mind that every statement may not explicitly include each component. But asking these questions is a good way to make sure you’re covering the key elements:

• Who: Who are the stakeholders that are affected by the problem?
• What: What is the current state, desired state, or unmet need? 
• When: When is the issue occurring or what is the timeframe involved?
• Where: Where is the problem occurring? For example, is it in a specific department, location, or region?
• Why: Why is this important or worth solving? How is the problem impacting your customers, employees, other stakeholders, or the organization? What is the magnitude of the problem? How large is the gap between the current and desired state? 

How do you write a problem statement?

There are many frameworks designed to help people write a problem statement. One example is outlined in the book, The Conclusion Trap: Four Steps to Better Decisions, ” by Daniel Markovitz. A faculty member at the Lean Enterprise Institute, the author uses many case studies from his work as a business consultant.

To simplify the process, we’ve broken it down into three steps:

1. Gather data and observe

Use data from research and reports, as well as facts from direct observation to answer the five Ws: who, what, when, where, and why. 

Whenever possible, get out in the field and talk directly with stakeholders impacted by the problem. Get a firsthand look at the work environment and equipment. This may mean spending time on the production floor asking employees questions about their work and challenges. Or taking customer service calls to learn more about customer pain points and problems your employees may be grappling with.    

2. Frame the problem properly  

A well-framed problem will help you avoid cognitive bias and open avenues for discussion. It will also encourage the exploration of more options.

A good way to test a problem statement for bias is to ask questions like these:

3. Keep asking why (and check in on the progress)

When it comes to problem-solving, stay curious. Lean on your growth mindset to keep asking why — and check in on the progress. 

Asking why until you’re satisfied that you’ve uncovered the root cause of the problem will help you avoid ineffective band-aid solutions.

What to avoid when writing a problem statement

When crafting a problem statement, it's essential to communicate the issue clearly and effectively. A well-formulated problem statement sets the stage for understanding and addressing the challenge at hand. However, there are common pitfalls that can undermine its clarity and purpose. Here's what you should avoid:

• Vagueness : Be specific about the problem and its context.
• Complexity : Keep the language simple and direct.
• Overgeneralization : Avoid broad statements that don’t address specific issues.
• Assumptions : Don’t presume solutions or causes without evidence.
• Jargon : Use clear, accessible language that can be understood by all stakeholders.

Refining your problem statements

When solving any sort of problem, there’s likely a slew of questions that might arise for you. In order to holistically understand the root cause of the problem at hand, your workforce needs to stay curious. 

An effective problem statement creates the space you and your team need to explore, gain insight, and get buy-in before taking action.

If you have embarked on a proposed solution, it’s also important to understand that solutions are malleable. There may be no single best solution. Solutions can change and adapt as external factors change, too. It’s more important than ever that organizations stay agile . This means that interactive check-ins are critical to solving tough problems. By keeping a good pulse on your course of action, you’ll be better equipped to pivot when the time comes to change. 

BetterUp can help. With access to virtual coaching , your people can get personalized support to help solve tough problems of the future.

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Madeline Miles

Madeline is a writer, communicator, and storyteller who is passionate about using words to help drive positive change. She holds a bachelor's in English Creative Writing and Communication Studies and lives in Denver, Colorado. In her spare time, she's usually somewhere outside (preferably in the mountains) — and enjoys poetry and fiction.

Problem and solution in a business plan: A practical example

In the dynamic world of business, success is not a destination but a journey filled with challenges and opportunities.

Problem: The Crux of Every Business Plan

Every business encounters problems, from market volatility to operational inefficiencies. A successful business plan begins by recognizing these issues. For instance, consider a startup offering eco-friendly products. Their problem might be high production costs due to the use of expensive, sustainable materials.

Solution: The Catalyst for Growth

The solution lies in innovative thinking and strategic planning. Our eco-friendly startup could explore alternative, cost-effective materials without compromising on quality or environmental impact. They might also consider partnerships with suppliers to negotiate better prices.

Case Study: From Problem to Solution

A real-life example is the rise of Warby Parker, a company that disrupted the eyewear industry by offering affordable, high-quality glasses online. Their problem was the high cost of traditional retail stores. The solution? A direct-to-consumer model, eliminating the need for brick-and-mortar stores and passing savings onto customers.

Research and Experimentation: The Backbone of Innovation

To substantiate our points, let’s look at a study by McKinsey & Company that found companies with a strong focus on problem-solving outperformed their peers in terms of profitability and growth. This underscores the importance of identifying problems and providing effective solutions in a business plan.

1. Why is it important to identify problems in a business plan? Identifying problems allows you to focus on areas that need improvement, leading to increased efficiency and profitability.

2. how can i find the right solution for my business problem research, experimentation, and seeking expert advice are key steps in finding the right solution., 3. can a business plan with a strong problem-solution focus still fail while a strong problem-solution focus increases the chances of success, it does not guarantee it. other factors such as market conditions and execution play a significant role., conclusion: navigating the business landscape.

In the ever-evolving business landscape, the ability to identify problems and provide effective solutions is paramount. By following this practical guide, you can steer your business towards success and navigate the challenges that lie ahead. Remember, every problem presents an opportunity for growth and innovation.

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How To Write The Best Problem Statement | Startups.com

The Startups Team

Your business plan needs a problem statement, because every great company starts by solving an important problem. The more accurately you articulate the problem, the more valuable the solution will be.

A common founder faux pas is overlooking the importance of giving the problem more weight than the solution. Founders get so excited about their solution that they forget to explain why the problem is so important. A well-articulated problem makes the value of your solution and your entire plan 10x more effective.

In many ways, the problem statement is the heart of your concept. It’s what intrigues people about the rest of your business and ultimately becomes the focal point for everything you build. Building a great case for your problem isn’t just about stating the problem, it’s about building an engaging story around that problem that people can empathize with personally.

Let’s use the example of Netflix, who initially solved the problem people had while having to travel to the video store to rent a movie. Netflix sought to avoid video stores altogether and instead deliver movies in an envelope to your mailbox, allowing you to keep the movie as long as you’d like.

At the time, the Netflix problem statement would probably look like this:

“Going to the video store is a pain. People don’t like traveling back and forth just to rent a movie and they hate paying late fees even more.”

That’s a pretty simple problem statement, and it’s accurate. Notice that it doesn’t include any reference to the solution. We’ll get to that later. A good problem statement focuses entirely on the problem so that the audience can build a powerful case for that problem.

A great problem statement has a lot more character to it. It tells more of a story, and provides an emotional connection to the solution. Building a better story takes more effort, but the payoff is real because you can draw your audience into your world and get them excited about your journey.

Step 1: Pick the biggest problem

There’s a good chance that your product solves multiple problems, and that’s wonderful. Right now, however, it’s time to lead with just one of them – the biggest problem you solve.

Investor Insight: “I have to see hundreds of pitches this month and I can barely remember one from the other. I need to focus on one single problem that a startup solves that I believe strongly in. I can’t possibly remember any more.”

There are two important reasons for this.

Investors won’t remember

Investors don’t have time to remember every detail of your pitch. Can you remember the last time you spent an hour watching a TV show and remembered every line of dialogue? You need to focus on the highlights and save the details for pointed questions later.

One problem needs to succeed

If your biggest problem isn’t compelling, it stands to reason that the second biggest problem you tackle isn’t going to save you. You don’t win on the number of problems you solve; you win on how well you solve a particular problem.

In the example of Netflix, we know that movie delivery solves lots of problems – convenience, movie selection, and cost effectiveness – among others. Yet some are more important than others. If Netflix was far cheaper than its rivals, but less convenient, you could argue that it would fail. Therefore, Netflix needs to be cheaper, but more importantly it must be more convenient. We then realize that “convenience” will be our lead problem.

This doesn’t mean we will ignore the other problems. We can certainly cite those as well, but we want to tighten our focus initially so that we can talk about this problem first, build a story around it, and then dig into related problems to solve later.

Step 2: Pump up the pain

Not all problems are created equal. The value of a problem is proportionate to how painful that problem is. The more painful the problem, the more powerful the solution.

You don’t have to be addressing a life-threatening problem to make it powerful. You need to focus on the detail of the pain in your problem. Even “convenience” can be presented very differently if it isn’t given enough character.

Compare these two versions of the same problem:

• Version 1: “Going to the video store is a pain.”
• Version 2: “Going to the video store requires fighting traffic, wandering the aisles and waiting in long lines just to get a single movie.”

Both statements have the same intent, but the second one details the pain. You don’t want to hope your audience will remember what fighting traffic was like – you want to tell them. You want to remind them of the nuances that make “going to the video store” such a miserable experience.

Step 3: Make your story relatable

As emotional beings, we attach to things we can relate to personally. The vision for your product is no different. The more your audience can relate to your story, the better they will understand it and want to connect to it.

There are a handful of ways that founders tend to build a relatable story.

Create a character

You’ve seen this in popular “explainer videos” where the story opens with “This is Jim. He loves watching movies but hates having to travel back and forth to the video store every week.” Startups use this to give their audiences a persona to connect to which allows them to more easily relate that to their own experiences.

Connect a personal journey

The problem often comes from the founders themselves, which suggests a personal story that people can relate to. In this case, you’re digging into the origin story of your startup or product, discussing how this problem affected you personally.  This allows you to be the central character that people can relate to and connect with.

Suggest an “everyman” problem.

Some problems are universal, such as a common frustration people have in everyday life. In the case of Netflix, the frustration of movie rentals was something almost everyone could relate to. They could open with “Aren’t you tired of having to travel back and forth to the video store every time you want to watch a movie?” Chances are their audience has dealt with this. It’s a bit of a gamble, so be mindful of assuming your audience shares your problem.

Any of these approaches can be used to create a story around your problem if they naturally work. If there’s nothing particularly relatable about your product or story (it may just be too specific), don’t torture it. These techniques can help communicate your problem more effectively, but they aren’t an absolute requirement.

Constructing the Problem Statement

Now that you have a sense for how to pick your problem, focus the pain, and build a story around it, we can construct our problem statement in a very deliberate manner:

Step 1 – Biggest Problem.

We determined that convenience was the biggest problem we were going to solve. While other problems like cost and selection were interesting, if consumers didn’t think Netflix was more convenient, they just wouldn’t use it.

Step 2 – Pump up the Pain.

It’s not just going to the video store that’s a pain, it’s all the frustration involved in making that journey. We dug into just how painful the convenience problem is.

Step 3 – Tell a Story.

We then began to build a story around who feels that pain and how it was something our audience could relate to.

Even though you know the elements of a good problem statement, it’s still possible to articulate this poorly. Just assume the first 20 times you pitch this problem (maybe a lot more!) you’re going to refine it. Don’t try to get the definitive version right out of the gates. It’s nearly impossible.

Here’s a horrible way to articulate the problem:

“The video rental industry has a categorically broken distribution model when delivery video-based content to consumers.”

Is that true? Yes. Is it relatable? Not at all!

Remember that facts alone are not a compelling narrative. A good problem statement isn’t just correct — it’s compelling. It pulls the audience in and gets them fired up.

Compare this to the version we developed earlier where we detailed the pain more acutely:

“Going to the video store requires fighting traffic, wandering the aisles and waiting in long lines just to get a single movie.”

If we really wanted to get creative we could try to build a story behind who is frustrated by using a character or a relatable scenario as well. This is helpful, but not a requirement. If it doesn’t feel like adding a character tells the story better, leave it out. Less is always more if it gets the job done.

The goal of the problem statement is not only to garner the attention of your audience, it also serves to make the solution look amazing. Next we are going to dig into the solution, but mind you we’ll be tweaking each element – problem, solution and market size – as we go. Iteration is our friend here!

Once you’ve articulated the problem, your next step is to think about how your solution fixes that problem beautifully. This requires just as much effort to keep the answer short and punchy as the problem statement.

Many founders assume that their audiences already understand why a product is important. They want to rush into their demo. Take a moment to make sure your audience understands the value of your solution before you crack open your laptop and start your demo!  Sell the trick, then perform it!

Connect directly to the problem

Your problem statement should set the stage for your solution to shine. In the case of Netflix, we did a nice job of explaining how painfully inconvenient going to a video store is.

We want our solution statement to connect directly to that problem – before we get into any other part of the solution. In the case of Netflix, our solution involves allowing anyone to watch movies streamed directly to their home or delivered to their mailbox (in case you forgot, Netflix also delivers DVDs!)

Problem:   “Going to the video store requires fighting traffic, wandering the aisles, and waiting in long lines just to get a single movie.”

Solution: “ Netflix allows anyone to enjoy thousands of titles streamed directly to their home or delivered to their mailbox.”

Voila! In just two sentences we’ve given a potential investor an easy-to-digest problem/solution statement.

What’s important here is what we’re not including. We’re not talking about the cost savings or the ability to get streamed content on multiple devices. That’s because we want to hook the audience in with our strongest value proposition from the start.

But, the problem statement is just one part of a business plan. Don’t miss these guides on how to create a business plan your investors will love.

• What Is a Business Plan: An Introductory Guide
• How To Write A Business Plan: A Comprehensive Guide
• 13 Key Components of a Business Plan

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Business Problem Statement Examples

For an existing product or service.

Template: [Our service/product] was designed to achieve [these goals]. We have observed [in this way] that the product/service isn’t meeting these goals which is causing [this adverse effect/business issue] to our business.

How might we improve service/product so that our customers are more successful as determined by [these measurable changes in customer behavior]?

For example: Our mobile banking app was designed to achieve seamless and user-friendly online banking experiences for our customers. We have observed through customer feedback and a 20% increase in support tickets that the app isn’t meeting these goals, which is causing a significant drop in customer satisfaction and an increase in customer churn to our business. How might we improve the mobile banking app so that our customers are more successful as determined by a 30% reduction in support tickets, a 15% increase in app usage frequency, and a 10% improvement in customer satisfaction scores?

For a new product or service

Template: The current state of the [domain] has focused primarily on [customer segments, pain points, etc.].  What existing products/services fail to address is [this gap].

Our product/service will address this gap by [vision/strategy]. Our initial focus will be [this segment].  We will know we are achieving our vision when we see [these measurable criteria/customer behaviors]. For example:  The current state of the personal wellness and mental health app domain has focused primarily on meditation and mindfulness practices targeting individuals already familiar with these techniques.  What existing products fail to address is the need for a comprehensive, all-in-one wellness solution that integrates physical health, mental well-being, and personalized habit-building for beginners who struggle to maintain consistent wellness routines. Our new product, BalanceWell, will address this gap by offering a holistic approach that combines personalized fitness plans, mental health exercises, habit tracking and daily wellness recommendations, all within a single app.  Our initial focus will be for young professionals who are new to wellness practices and are looking for an easy, accessible way to start and maintain healthy habits. We will know we are achieving our vision when we see a 30% increase in daily active users, a 25% improvement in user-reported well-being scores after three months, and a 20% reduction in churn rate compared to industry averages.

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Problem Statement Templates and Examples for Businesses

A problem statement serves as a clear and concise declaration of the core issue that your startup aims to solve.

It outlines the existing gap between the current state and the desired state, answering the questions:

• What's wrong?
• Why does it matter?
• How will my startup fix it?

Being able to articulate a compelling problem statement is critical for both internal clarity and external communication . It guides your internal product development and strategy, and externally, it serves as your north star for investor pitches, grant applications and customer acquisition efforts.

Writing problem statements can be tricky. To help break through the writer's block, we'll share a few problem statement examples.

But First, What Is A Problem Statement?

A problem statement (sometimes called a "framing statement") is 100-150 words outlining the problem to be solved and why it is important to solve.

It helps stakeholders immediately grasp the significance of your mission and the opportunity it represents . To be effective, the problem statement must be specific enough to illustrate the impact of the issue.

It should concisely articulate pain points or gaps, which your startup aims to address. This establishes a direct connection between the problem and the impact it has on your target audience.

That then sets up Part 2: The solution statement.

Solution Statements

Solution statements encapsulate how your startup specifically addresses the identified problem and why it's different from the options currently available. A well-crafted solution statement not only describes the practical application of your solution but also emphasizes its benefits and impact.

Problem Statement Examples

Seems simple enough, right? Let's review some problem statements and solution statements for some well-known companies.

Note that these aren't problem statements officially used by these companies, but rather our attempts at distilling them.

Problem Statement:

Traditional cable television and rental services offer limited flexibility, leading to a subpar consumer experience. Users are tied to predetermined schedules, limited choices and cumbersome rental procedures. The industry is ripe for disruption, as evidenced by declining cable subscriptions and the increasing adoption of internet-enabled devices for content consumption.

Solution Statement:

Netflix revolutionizes the way people consume entertainment by offering an on-demand streaming service with an extensive library of films, TV shows and original content. Accessible across multiple devices, Netflix provides a personalized, user-friendly experience free from commercials. Leveraging data analytics for content recommendations, we seek to create an engaging platform that not only satisfies current entertainment needs but also anticipates and adapts to evolving consumer preferences.

Traditional taxi services suffer from inefficiencies, including limited availability, inconsistent pricing and lack of transparency. These problems are exacerbated during peak hours and in areas with low taxi density. The absence of a convenient, reliable and cost-effective mode of on-demand transportation represents a significant gap in the market.

Uber's ride-sharing platform connects drivers and riders in real-time via a mobile application. The platform will offer transparent pricing, instant ride availability and user reviews to ensure quality. By utilizing GPS and data analytics, Uber aims to optimize route planning and reduce waiting times. This solution promises a seamless, reliable and efficient transportation experience for both drivers and riders.

Traditional grocery shopping is time-consuming and often inconvenient, especially for busy professionals, elderly individuals or those with limited mobility. The existing solutions like scheduled delivery services lack real-time availability and offer a narrow range of products. The inconvenience amplifies during peak times and weather-related events, revealing a clear need for a more efficient, flexible solution.

Instacart transforms the grocery shopping experience by offering an on-demand delivery service through a user-friendly mobile app. Partnering with local grocery stores, Instacart will provide a wide range of products at competitive prices. Users can shop virtually and have their orders delivered to their doorsteps within a specified time window.

The automotive industry has long relied on fossil fuels, contributing significantly to environmental degradation and climate change. Traditional cars emit greenhouse gasses and the existing electric vehicles (EVs) on the market suffer from limited range, lengthy charging times and lack of performance. These barriers have hindered the mass adoption of sustainable transportation solutions.

Tesla accelerates the world's transition to sustainable energy by producing electric vehicles that offer both high performance and long-range capabilities. Through cutting-edge battery technology, efficient powertrains and an expanding network of fast-charging stations, Tesla seeks to remove the existing barriers to EV adoption. Additionally, Tesla's vehicles come equipped with advanced safety features and autonomous driving capabilities, providing not just a green alternative but also a more intelligent, safer mode of transportation.

Need Help Defining Your Problem Statement? Meet Archie, Our AI-Driven Product Architect

Everyone could use a little help getting their framing statements fine-tuned. Say hello to Archie, our AI-driven product architect .

The way it works is simple: Just give Archie a quick description of your idea. It'll immediately get to work, using its foundation of product lifecycle-tuned large language models to provide detailed recommendations to help you get your idea off the ground.

It starts with detailed architectural and technical recommendations, but, we should emphasize, that's just the start . Archie goes beyond the tactical and technical to dive into business strategy concepts, giving you detailed information on:

• Problem statements
• Monetization mechanics
• The novelty of your idea
• Your potential for bootstrapping
• Regulatory or compliance issues to be aware of

Archie's suggestions can spark inspiration, and it can help you see around corners for compliance, security and other concerns you may not have expertise in.

Archie is free to get started. Give it a try here.

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