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How to Create a Convincing Problem and Solution Statement

Female entrepreneur speaking with a colleague about the problem she is solving for customers with her business idea.

Makenna Crocker

10 min. read

Updated November 3, 2023

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“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.

What’s your biggest business challenge right now?

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!

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Content Author: Makenna Crocker

Makenna Crocker

Makenna Crocker is the Social Brand Manager at Palo Alto Software. Her work focuses on market and social trends, educational content creation, and providing entrepreneurs with small business tips and tools. 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 social media and sharable content.