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Business Problem Statement Explained with Examples

Problem Statement Templates

Free Problem Statement Templates

Ayush Jalan

  • January 2, 2024

Business Problem Statement_ Explained with Examples

Running a business is an extremely tedious task. Almost always, there’s a problem or two that needs your immediate attention, and 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.

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

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

What Is a Business Problem Statement?

It defines 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.

A business problem statement is a compact communication tool that helps you convey what you want to change.

How to Write a Business Problem Statement?

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 have the knowledge to describe your problem and also suggest a solution to it.

To make things easy for you, we have explained the four key aspects 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 terms. It is highly recommended to avoid industrial lingo and buzzwords. Write a 3-5 sentences long summary, avoid writing more than it.

2. Provide the problem analysis

Adding statistics and results from surveys, industry trends, customer demographics, staffing reports, etc., helps the reader understand the problem distinctly. These references should describe your problem and its effects on various attributes of your business.

Avoid adding too many numbers in your problem statement, and include only the absolute necessary statistics. It’s best to include not more than three significant facts.

3. Propose a solution

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

Avoid including elaborate actions and steps in a problem statement. 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 keeping in mind the reader’s knowledge about the situation, requirements, and expectations.

Although intuitive knowledge does have its place, it is wiser to first consider and mention the facts you have learned based on your research and propose solutions accordingly.

How to Develop a Business Problem Statement

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 customers, the 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: How is the problem observed? Mention the indications of the problem. Talk about the observations you made while conducting problem 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

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:

Template 2:.

Business problem statement template

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 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 to your business partners and find solutions faster.

It helps you present a concise yet informative description of the problem and its potential solutions. Use the above template to create a problem state for your business and eliminate the need to scour through complex documents.

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About the Author

problem solution in business plan

Ayush is a writer with an academic background in business and marketing. Being a tech-enthusiast, he likes to keep a sharp eye on the latest tech gadgets and innovations. When he's not working, you can find him writing poetry, gaming, playing the ukulele, catching up with friends, and indulging in creative philosophies.

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50 Business Problem Statement Examples [+Tips To Write]

Editorial Team

50 Business Problem Statement Examples

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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Effective problem statements have these 5 components

problem-statement-colleagues-gathered-talking-in-office

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 

problem-statement-colleagues-solving-at-laptop

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.

problem-statement-man-with-arms-crossed-smiling

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.

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.

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10 Step Process for Effective Business Problem Solving

Posted august 3, 2021 by harriet genever.

Navigate uncertainty by following this 10-step process to develop your problem-solving skills and approach any issue with confidence. 

When you start a small business or launch a startup, the one thing you can count on is the unexpected. No matter how thoroughly you plan, forecast , and test, problems are bound to arise. This is why as an entrepreneur, you need to know how to solve business problems effectively.

What is problem solving in business?

Problem solving in business relates to establishing processes that mitigate or remove obstacles currently preventing you from reaching strategic goals . These are typically complex issues that create a gap between actual results and your desired outcome. They may be present in a single team, operational process, or throughout your entire organization, typically without an immediate or obvious solution. 

To approach problem solving successfully, you need to establish consistent processes that help you evaluate, explore solutions, prioritize execution, and measure success. In many ways, it should be similar to how you review business performance through a monthly plan review . You work through the same documentation, look for gaps, dig deeper to identify the root cause, and hash out options. Without this process, you simply cannot expect to solve problems efficiently or effectively. 

Why problem solving is important for your business

While some would say problem-solving comes naturally, it’s actually a skill you can grow and refine over time. Problem solving skills will help you and your team tackle critical issues and conflicts as they arise. It starts from the top. You as the business owner or CEO needing to display the type of level-headed problem solving that you expect to see from your employees.

Doing so will help you and your staff quickly deal with issues, establish and refine a problem solving process, turn challenges into opportunities, and generally keep a level head. Now, the best business leaders didn’t just find a magic solution to solve their problems, they built processes and leveraged tools to find success. And you can do the same.

By following this 10-step process, you can develop your problem-solving skills and approach any issue that arises with confidence. 

1. Define the problem

When a problem arises, it can be very easy to jump right into creating a solution. However, if you don’t thoroughly examine what led to the problem in the first place, you may create a strategy that doesn’t actually solve it. You may just be treating the symptoms.

For instance, if you realize that your sales from new customers are dropping, your first inclination might be to rush into putting together a marketing plan to increase exposure. But what if decreasing sales are just a symptom of the real problem? 

When you define the problem, you want to be sure you’re not missing the forest for the trees. If you have a large issue on your hands, you’ll want to look at it from several different angles:

Competition 

Is a competitor’s promotion or pricing affecting your sales? Are there new entrants in your market? How are they marketing their product or business?

Business model 

Is your business model sustainable? Is it realistic for how fast you want to grow? Should you explore different pricing or cost strategies?

Market factors

How are world events and the nation’s economy affecting your customers and your sales?

Are there any issues affecting your team? Do they have the tools and resources they need to succeed? 

Goal alignment 

Is everyone on your team working toward the same goal ? Have you communicated your short-term and long-term business goals clearly and often?

There are a lot of ways to approach the issue when you’re facing a serious business problem. The key is to make sure you’re getting a full snapshot of what’s going on so you don’t waste money and resources on band-aid solutions. 

Going back to our example, by looking at every facet of your business, you may discover that you’re spending more on advertising than your competitors already. And instead, there’s a communication gap within your team that’s leading to the mishandling of new customers and therefore lost sales. 

If you jumped into fixing the exposure of your brand, you would have been dumping more money into an area you’re already winning. Potentially leading to greater losses as more and more new customers are dropped due to poor internal communication.

This is why it’s so vital that you explore your blind spots and track the problem to its source.

2. Conduct a SWOT analysis

All good businesses solve some sort of problem for customers. What if your particular business problem is actually an opportunity, or even a strength if considered from a different angle? This is when you’d want to conduct a SWOT analysis to determine if that is in fact the case.

SWOT is a great tool for strategic planning and bringing multiple viewpoints to the table when you’re looking at investing resources to solve a problem. This may even be incorporated in your attempts to identify the source of your problem, as it can quickly outline specific strengths and weaknesses of your business. And then by identifying any potential opportunities or threats, you can utilize your findings to kickstart a solution. 

3. Identify multiple solutions with design thinking

As you approach solving your problem, you may want to consider using the design thinking approach . It’s often used by organizations looking to solve big, community-based problems. One of its strengths is that it requires involving a wide range of people in the problem-solving process. Which leads to multiple perspectives and solutions arising.

This approach—applying your company’s skills and expertise to a problem in the market—is the basis for design thinking.

It’s not about finding the most complex problems to solve, but about finding common needs within the organization and in the real world and coming up with solutions that fit those needs. When you’re solving business problems, this applies in the sense that you’re looking for solutions that address underlying issues—you’re looking at the big picture.

4. Conduct market research and customer outreach

Market research and customer outreach aren’t the sorts of things small business owners and startups can do once and then cross off the list. When you’re facing a roadblock, think back to the last time you did some solid market research or took a deep dive into understanding the competitive landscape .

Market research and the insights you get from customer outreach aren’t a silver bullet. Many companies struggle with what they should do with conflicting data points. But it’s worth struggling through and gathering information that can help you better understand your target market . Plus, your customers can be one of the best sources of criticism. It’s actually a gift if you can avoid taking the negatives personally .

The worst thing you can do when you’re facing challenges is isolating yourself from your customers and ignore your competition. So survey your customers. Put together a competitive matrix . 

5. Seek input from your team and your mentors

Don’t do your SWOT analysis or design thinking work by yourself. The freedom to express concerns, opinions, and ideas will allow people in an organization to speak up. Their feedback is going to help you move faster and more efficiently. If you have a team in place, bring them into the discussion. You hired them to be experts in their area; use their expertise to navigate and dig deeper into underlying causes of problems and potential solutions.

If you’re running your business solo, at least bring in a trusted mentor. SCORE offers a free business mentorship program if you don’t already have one. It can also be helpful to connect with a strategic business advisor , especially if business financials aren’t your strongest suit.

Quoting Stephen Covey, who said that “strength lies in differences, not in similarities,” speaking to the importance of diversity when it comes to problem-solving in business. The more diverse a team is , the more often innovative solutions to the problems faced by the organization appear.

In fact, it has been found that groups that show greater diversity were better at solving problems than groups made up specifically of highly skilled problem solvers. So whoever you bring in to help you problem-solve, resist the urge to surround yourself with people who already agree with you about everything.

6. Apply lean planning for nimble execution

So you do your SWOT analysis and your design thinking exercise. You come up with a set of strong, data-driven ideas. But implementing them requires you to adjust your budget, or your strategic plan, or even your understanding of your target market.

Are you willing to change course? Can you quickly make adjustments? Well in order to grow, you can’t be afraid to be nimble . 

By adopting the lean business planning method —the process of revising your business strategy regularly—you’ll be able to shift your strategies more fluidly. You don’t want to change course every week, and you don’t want to fall victim to shiny object thinking. But you can strike a balance that allows you to reduce your business’s risk while keeping your team heading in the right direction.

Along the way, you’ll make strategic decisions that don’t pan out the way you hoped. The best thing you can do is test your ideas and iterate often so you’re not wasting money and resources on things that don’t work. That’s Lean Planning .

7. Model different financial scenarios

When you’re trying to solve a serious business problem, one of the best things you can do is build a few different financial forecasts so you can model different scenarios. You might find that the idea that seemed the strongest will take longer than you thought to reverse a negative financial trend. At the very least you’ll have better insight into the financial impact of moving in a different direction.

The real benefit here is looking at different tactical approaches to the same problem. Maybe instead of increasing sales right now, you’re better off in the long run if you adopt a strategy to reduce churn and retain your best customers. You won’t know unless you model a few different scenarios. You can do this by using spreadsheets, and a tool like LivePlan can make it easier and quicker.

8. Watch your cash flow

While you’re working to solve a challenging business problem, pay particular attention to your cash flow and your cash flow forecast . Understanding when your company is at risk of running out of cash in the bank can help you be proactive. It’s a lot easier to get a line of credit while your financials still look good and healthy, than when you’re one pay period away from ruin.

If you’re dealing with a serious issue, it’s easy to start to get tunnel vision. You’ll benefit from maintaining a little breathing room for your business as you figure out what to do next.

9. Use a decision-making framework

Once you’ve gathered all the information you need, generated a number of ideas, and done some financial modeling, you might still feel uncertain. It’s natural—you’re not a fortune-teller. You’re trying to make the best decision you can with the information you have.

This article offers a really useful approach to making decisions. It starts with putting your options into a matrix like this one:

problem solution in business plan

Use this sort of framework to put everything you’ve learned out on the table. If you’re working with a bigger team, this sort of exercise can also bring the rest of your team to the table so they feel some ownership over the outcome.

10. Identify key metrics to track

How will you know your problem is solved? And not just the symptom—how will you know when you’ve addressed the underlying issues? Before you dive into enacting the solution, make sure you know what success looks like.

Decide on a few key performance indicators . Take a baseline measurement, and set a goal and a timeframe. You’re essentially translating your solution into a plan, complete with milestones and goals. Without these, you’ve simply made a blind decision with no way to track success. You need those goals and milestones to make your plan real .

Problem solving skills to improve

As you and your team work through this process, it’s worth keeping in mind specific problem solving skills you should continue to develop. Bolstering your ability, as well as your team, to solve problems effectively will only make this process more useful and efficient. Here are a few key skills to work on.

Emotional intelligence

It can be very easy to make quick, emotional responses in a time of crisis or when discussing something you’re passionate about. To avoid making assumptions and letting your emotions get the best of you, you need to focus on empathizing with others. This involves understanding your own emotional state, reactions and listening carefully to the responses of your team. The more you’re able to listen carefully, the better you’ll be at asking for and taking advice that actually leads to effective problem solving.

Jumping right into a solution can immediately kill the possibility of solving your problem. Just like when you start a business , you need to do the research into what the problem you’re solving actually is. Luckily, you can embed research into your problem solving by holding active reviews of financial performance and team processes. Simply asking “What? Where? When? How?” can lead to more in-depth explorations of potential issues.

The best thing you can do to grow your research abilities is to encourage and practice curiosity. Look at every problem as an opportunity. Something that may be trouble now, but is worth exploring and finding the right solution. You’ll pick up best practices, useful tools and fine-tune your own research process the more you’re willing to explore.

Brainstorming

Creatively brainstorming with your team is somewhat of an art form. There needs to be a willingness to throw everything at the wall and act as if nothing is a bad idea at the start. This style of collaboration encourages participation without fear of rejection. It also helps outline potential solutions outside of your current scope, that you can refine and turn into realistic action.

Work on breaking down problems and try to give everyone in the room a voice. The more input you allow, the greater potential you have for finding the best solution.

Decisiveness

One thing that can drag out acting upon a potential solution, is being indecisive. If you aren’t willing to state when the final cutoff for deliberation is, you simply won’t take steps quickly enough. This is when having a process for problem solving comes in handy, as it purposefully outlines when you should start taking action.

Work on choosing decision-makers, identify necessary results and be prepared to analyze and adjust if necessary. You don’t have to get it right every time, but taking action at the right time, even if it fails, is almost more vital than never taking a step.  

Stemming off failure, you need to learn to be resilient. Again, no one gets it perfect every single time. There are so many factors in play to consider and sometimes even the most well-thought-out solution doesn’t stick. Instead of being down on yourself or your team, look to separate yourself from the problem and continue to think of it as a puzzle worth solving. Every failure is a learning opportunity and it only helps you further refine and eliminate issues in your strategy.

Problem solving is a process

The key to effective problem-solving in business is the ability to adapt. You can waste a lot of resources on staying the wrong course for too long. So make a plan to reduce your risk now. Think about what you’d do if you were faced with a problem large enough to sink your business. Be as proactive as you can.

Editor’s note: This article was originally published in 2016. It was updated in 2021.

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Harriet Genever

Harriet Genever

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Effective Problem Statement Examples in Business

Learn about problem statements and why they are so important for your business.

Every great company started by solving an important problem. The more effectively you articulate a problem, the more valuable your solution will be. This is why your business plan needs to have a problem statement. 

A common mistake businesses make is that they do not give the problem as much importance as the solution. Instead, most business owners get excited about the solution — but in doing so, they tend to forget to explain why the problem is important.

A well-articulated problem gives your solution more value. It makes your entire plan 10x more effective.

This article takes a look at what a problem statement is. It also includes problem statement examples, how to write an effective problem statement for your business, and more.

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What is a problem statement ​.

Ultimately, most business owners want their company’s products or services to solve a problem for their core customers.

That means your problem statement is the heart of your concept. It is the very thing that gets people interested in you and your business. Eventually, it becomes the focal point.

Put simply, a problem statement defines a problem and identifies what a solution would look like. But to build a good case for the problem is to not just state the problem. You should also build an engaging story around that problem — one that people can relate to.

Purpose of a problem statement ​

Problem statements are important to businesses, individuals, and other entities because they help keep the entire team focused on solutions.  Problem statements are also important for these reasons:

  • First, they allows you to identify and explain the problem in a concise but detailed way. This gives the reader a comprehensive view of what's going on. You can identify who the problem impacts, what the impacts are, where the problem occurs, and why and when it needs to be fixed.
  • They clarify what the expected outcomes are. When you establish what the desired situation looks like, it helps give an overarching idea about the entire project. The proposed solution, scope, and goals of the solution are all made clear through the problem statement.
  • They act as a guide, helping you navigate your business and can help your team remain focused. You'll find that you'll come back to your problem statement from time to time to ensure the solution has been implemented and that it does indeed solve the initial problem.

A great problem statement will help to ensure that all objectives of your business are being met.

Examples of problem statements in business ​

There are tons of successful examples of problem statements from various companies. Let's take Netflix for example. They solved the problem of having to go to the video store to rent movies.

Netflix originally eliminated the need to go to the video store by delivering movies in an envelope to your mailbox. This allowed people to keep the movies for as long as they'd like.

At that time, the use case for Netflix was something 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."

A simple interpretation of Netflix's problem statement would be:

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."

As you can see in just two sentences, you have given a potential investor an easy problem/solution statement. This example of what Netflix's problem statement would have looked like is simple, yet it gets straight to the point.

A good problem statement will solely focus on the problem. This allows the audience to build a powerful case for the problem and accept the solution you are trying to provide.

Another example problem statement is from Facebook . Harvard had its very own version of Facebook when Mark Zuckerberg was a student. Zuckerberg's frustration was that "he could only search and look at people's information on the university's version of Facebook and not perform any sort of social interactions like liking, commenting, etc."

This was when he came up with the idea to create a new platform. He hoped to create something new that allowed users to search for people according to their interests. Users would also be able to create an online network of friends and study groups.

Facebook’s problem statement would have probably said something like:

“A lack of social interaction among a group of people who share common interests/attributes is a waste of time. People cannot create strong connections without interacting with each other.”

A simple interpretation of Facebook’s problem statement would be:

Problem: Connecting with others and being able to comment or like their posts, etc., can have an adverse effect on making strong connections with like-minded people.

Solution: Facebook allows you to connect, create strong connections and interact with people with similar interests.

Key elements of a good problem statement ​

There are certain key elements to a good problem statement. These include:

Ideal situation

Your problem statement should outline what the ideal situation would be if there wasn't a problem that needed your attention. This is where you will identify the goals and the scope of the project. This section needs to give a clear understanding of what the ideal scenario will be once the issue is resolved and what your business can do to solve the issue.

Moving on, your problem statement should concisely describe what the current reality is for your business. Here, you will identify the problem, state why it's a problem, and identify who the problem is affecting. Moreover, this section will also describe when and where the problem was identified. All in all, this section is basically a scenario analysis.

Consequences

At this stage, your problem statement needs to identify the consequences of the problem. It should outline how people affected by the problem are being impacted and quantify how much the problem is impacting them. Some common consequences may include the loss of time, money, resources, competitive advantage, productivity, and efficiency.

This section of your problem statement may include a few possible solutions to the problem. It is important to not identify a specific solution. The purpose of this section is to guide the business team on how to research, investigate and resolve the problem.

How to write a problem statement ​

When writing a great problem statement, there are a few things to keep in mind. Here are some tips to follow when writing a problem statement for your business:

Describe the ideal situation you aim to achieve

To get started, try to provide some context that will make it easier to understand the problem. Begin by explaining how the particular process should work. Before mentioning the problem, try to describe how the process would function if the current problem didn't exist. Be sure to keep the end-user in mind.

Let's say you have an idea of how to increase efficiency in a process to maximize the best use of resources. You can start describing a theoretical situation whereby the system is far more efficient and work towards your proposal from there. Just keep in mind who, what, where, and why so that you can stay on point.

Choose the biggest problem to solve

Oftentimes, you may find that your products or services can solve multiple problems. However, when defining your problem statement, focus on the biggest problem you can solve.

If you are going to be pitching to investors, keep in mind that they won't be able to remember all of the problems. They're most likely to remember your products/services that can solve their biggest problem.

Consider audience's needs

Be sure to review reports and talk to your employees to fully understand the scope of the problem. Their problem-solving skills can come in handy.

Take into consideration the needs and experiences of your audience when writing problem statements. People will relate to you and your problem statement if they have experienced something similar.

Furthermore, the vision for your product or service should be the same as well. The more your target audience relates to your story, the better they'll understand and connect with it.

Provide facts about the problem 

Most business problem statements are backed by surveys or statistics. Your business's problem statement can include references to internal or external reports, staffing reports, statistics, customer demographics, national trends, etc. Of course, what you include depends on the problem you're solving.

Try to avoid adding excess numbers and irrelevant information. Ensure that you only include key statistics and solid data that highlight the severity of the problem.

Explain the benefits of your proposed solution

At this point in your problem statement, you've described the ideal situation where the problem doesn't exist. You've also pointed out the problem, explained what the consequences are if they're not fixed, and proposed solutions.

It is now time to explain the benefits of your solution. Focus on the efficiency and the financial impact of your solutions. Talk about the financial costs your solution will decrease and how your solution can free up revenue streams. You can also address the intangible benefits of your solution like increased client satisfaction.

If you need help solving business problems of your own, or you want to step up your marketing efforts, contact the team at Scorpion. We have helped thousands of home services , legal , franchise , and other small business professionals grow their businesses. 

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problem solution in business plan

What is a Solution Statement? (Definition and Examples)

How do you define a solution, and how do you frame it into a solution statement for your startup business?

problem solution in business plan

What is a Solution Statement? 🤷🏼

Your solution statement should directly explain what opportunities there are to solve the problem that you stated in your problem statement . It's the "how" to your "why" and the time to communicate your brilliant idea. Your problem statement should set the stage for your solution to shine.

Let's look at a successful startup, Lime, who found a great solution to an existing problem. Lime is an e-scooter and bike-sharing startup that, since its launch in 2017, has rapidly grown into one of the world's biggest e-scooter and bike-sharing networks since its launch. In their pitch, the founders said they were poised to change urban transportation as we know it by solving the last-mile problem.

The Last-Mile Problem 🚶

When people consider the nearest bus or train station is too far to walk and too close to drive, adding other factors such as weather (too hot/cold), terrain (hills), and time, they end up just driving straight to their work, university, shops, etc. Lime managed to make that 'last mile' a lot more accessible and manageable for commuters while reducing the number of cars and pollution. They had a straightforward solution to an apparent problem.

problem solution in business plan

The E-Scooter Solution Statement 🛴

When defining the solution in your business plan, it needs to be kept short, simple, engaging, to the point, and easy to understand. Steer clear of complicated technical terms. Rule of thumb? Even your grandma should get it. In the case of Lime, their solution statement would have sounded a little like this:

"People need access to an alternative transport option that provides an easy, convenient, fast and sustainable way to get to main transport links without the need to drive or walk."

The Netflix Example 🍿

In another example, we used the case of Netflix in our problem statement article, where we explained how painfully inconvenient going to a video store is. We want the solution statement to connect directly to that problem:

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." (Yep, mail-order movies was where Netflix started before streaming was a thing).

The Ed-Tech Startup Example 🧑‍🔬

Meet Labster - a learning platform for virtual labs and science simulations. They use virtual reality and immersive simulations paired with game-based learning to make the science lab much more engaging. All the student needs is a computer and an internet connection. Pretty cool! This is how they would have connected their solution statement to the problem:

Problem: "Students are finding science experiments boring and have difficulty staying engaged and arriving prepared for lab work."

Solution: "To transform the way science is taught by making immersive digital experiences with engaging storylines and project-based learning."

How Do You Frame The Solution For Your Startup? 🖼

Defining your solution can take time. For some, it might not come as naturally or easily as they had first imagined. But don't fret. It will come at a good time if you understand how to frame it properly. How you do this early in the idea stage can be the difference between success and failure later on. Success is clearly what everyone aims for, so what steps should you take to frame your solution successfully? You need to be able to answer the following questions:

  • What is your solution offering? 
  • Are you actually solving the problem? 
  • Does the solution create a viable business model? 
  • Is your solution different or unique from your competitors? 

These questions serve as a checklist for yourself to verify whether your solution is appropriate ✅

Remember that you want to keep people engaged. Don't exhaust them with long explanations on how your solution works, how you will develop it, and what it will cost; you will have plenty of time for that later. Now that you have successfully defined your solution, you are ready to move on to your Unique Value Proposition . 

Mastering the Art of Business Problem Statements: A Comprehensive Guide with Examples

Why is the business problem statement is important.

The business problem statement provides the impetus for a business initiative in practical business related terms. It is a description of an issue currently existing and the context for how it will be addressed.

In a business setting, anyone who is involved in problem-solving or decision-making should be involved in developing a business problem statement. This could include managers, executives, analysts, project managers, or subject matter experts.

Typically, the responsibility for developing a problem statement falls on the person or team that is leading the effort to address the problem. This may be a project manager, a cross-functional team, or an individual responsible for a specific area of the business – including the Business Analyst!

In some cases, it may be appropriate to involve external consultants or experts in developing a problem statement. This can bring fresh perspectives and specialised knowledge to the problem-solving process.

Ultimately, the goal is to involve all relevant stakeholders in developing a problem statement to ensure that the problem is fully understood and the proposed solutions are feasible and effective.

Developing a business problem statement is important for several reasons:

  • Clarify the problem: Developing a problem statement helps you to clarify and define the problem you are trying to solve. This can help you to focus your efforts on the key issues and avoid wasting time and resources on non-essential tasks.
  • Identify the root causes: A well-crafted problem statement can help you to identify the root causes of the problem. This is important because it allows you to develop effective solutions that address the underlying issues rather than just treating the symptoms.
  • Communicate with stakeholders: A problem statement provides a clear and concise summary of the problem and its impact. This can help you to communicate effectively with stakeholders and get their buy-in for your proposed solutions.
  • Measure progress: A problem statement provides a baseline for measuring progress. By defining the problem and its impact, you can track your progress over time and determine whether your solutions are effective.
  • Prioritise resources: A problem statement can help you to prioritise your resources and focus on the most critical problems. This is especially important in situations where resources are limited, and you need to make strategic decisions about where to allocate your time and money.

Developing a business problem statement is essential for effective problem-solving. It helps to clarify the problem, identify the root causes, communicate with stakeholders, measure progress, and prioritise resources.

When to Develop Problem Statements

You can develop a problem statement whenever you need to identify and analyse a problem, and develop solutions to address it. Some specific situations where this can occur include:

  • Project initiation: When starting a new project, a problem statement template can be used to define the scope and objectives of the project, and identify potential risks and issues that may impact the project’s success.
  • Process improvement: When looking to improve a business process, product, or service, a problem statement template can be used to identify and analyse the root causes of the problem, and develop solutions to address them.
  • Research projects: When developing a research project, a problem statement template can be used to formulate research questions, and identify the gaps and limitations in existing literature or data.
  • Policy development: When developing policies and programs to address social, economic, or environmental issues, a problem statement template can be used to identify and analyse the policy issue, and develop evidence-based solutions.
  • Strategic planning: When developing a strategic plan for an organisation, a problem statement template can be used to identify and analyse the challenges and opportunities facing the organisation, and develop a roadmap for achieving its goals.

Overall, you can use a problem statement template whenever you need to identify and analyse a problem, and develop solutions to address it. Categorisation will help you develop a structured, consistent, and efficient approach to problem-solving.

Categorisation of Business Problem Statements

There are several ways to categorise business problem statements, and the specific categories may vary depending on the organisation or industry. Here are some common ways to categorise business problem statements:

  • Functional area: Categorise the problem statement based on the functional area of the business that is affected. For example, problems related to marketing, finance, operations, human resources, or information technology.
  • Customer impact: Categorise the problem statement based on the impact on customers or clients. For example, problems related to customer satisfaction, retention, acquisition, or loyalty.
  • Business process: Categorise the problem statement based on the business process that is affected. For example, problems related to supply chain management, product development, sales, or customer service.
  • Strategic priority: Categorise the problem statement based on the strategic priority of the organisation. For example, problems related to growth, innovation, cost reduction, or risk management.
  • Industry or market: Categorise the problem statement based on the industry or market in which the business operates. For example, problems related to competition, changing customer needs, or regulatory compliance.
  • Business architecture. Categorise the problem statement based on capabilities to help you understand business capability maturity, the impacts on change, and opportunities for improvement. See below for categories.

By categorising business problem statements, you can better understand the scope and nature of the problems and develop targeted solutions that address the root causes of the problems. This can help to improve the efficiency and effectiveness of your problem-solving efforts.

Business Architecture Categories

Problem statements can be described in a single statement followed by a real example to emphasise the issue. When developing an understanding of the problems to be resolved think across the seven broad areas shown below and ask questions accordingly. Examples are given for each category using the architectural approach with the capability subsets of: strategy; service/products, people; processes; applications; information, and infrastructure.

1. Strategy

  • Poor alignment with business objectives.
  • Initiatives are currently not aligned to an overall vision.
  • Siloed implementation of projects.

2. Service / Products

  • Impediment to service delivery due to untimely retrieval of information.
  • Slow responsiveness in engaging sales leads due to untimely retrieval of information.
  • High level of product returns due to errors made on sales orders.
  • Inadequate training of staff and/or lack of capacity for staff to support areas of the business experiencing bottlenecks.
  • Poorly defined roles and responsibilities creates confusion and poor responsiveness to operational demands.
  • Poor service delivery due to staff capacity and training issues.

4. Processes

  • Myriad of duplicated business processes and applications.
  • Intensive manual processing due to physical handling of paperwork, mail outs and manual coordination of events.
  • Double data entry and manual maintenance of data in spread sheets or personal databases.

5. Applications

  • Poorly developed functionality due to inadequate definition of business and functional requirements.
  • Out of date functionality caused by a constantly evolving business climate.
  • Little or no application support due to proprietary or redundant software.

6. Information

  • Unstructured information and content stored on various devices making search and retrieval very difficult.
  • No metadata attached to information making search and retrieval difficult.
  • Disparate methods of coding the same types of datasets in disparate repositories.

7. Infrastructure

  • Not a lot known about all systems making the strategic coordination of maintenance difficult.
  • Multiple applications are supported on multiple systems creating unnecessary maintenance overheads by supporting duplicate systems.

When you have understood problems, describe the risks associated with each to fully emphasise the potential impacts on the business (e.g. costs, inefficiencies, and lost opportunities).

A Problem Statement Example in Business

Below is an example describing a problem statement, description and associated risk for a highly manual business process that can easily be resolved with technology.

Problem Statement: Intensive manual processing due to physical handling of paperwork. Description : Annual leave forms are typically filled out by the Employee, printed, sent to the Manager/Delegate for approval, sent to Human Resources for verification and data entry, scanned and uploaded to the EDRMS, and then sent to Payroll for (re) data entry. Risk : This highly manual scenario leads to ‘bottlenecks’ in service delivery and promotes the risk of poor organisational response to business and lost time that should be spent carrying out core business.

Tools for Developing Problem Statements

To develop the problem statement and associated risks of a project, engage with managers and subject matter experts within the relevant business areas. Ask them questions specific to your categorisation approach to bring out the details of where the problems lie. This approach can be implemented in the project’s initial set up and analysis phases irrespective of the methodology (i.e., Agile or Waterfall) being utilised. It is useful for developing project mandates and business cases.

There are several tools you can use to write a business problem statement, including:

  • Brainstorming: Gather a group of stakeholders or team members and brainstorm all of the potential problems facing the business. Narrow down the list to the most pressing issues and identify the root cause of each problem.
  • SWOT analysis: Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to identify the internal and external factors impacting the business. Use this analysis to pinpoint the key problem areas.
  • Fishbone diagram: Use a fishbone diagram (also known as an Ishikawa diagram) to identify the potential causes of a problem. This tool can help you visualise the different factors contributing to the problem and narrow down the root cause.
  • 5 Whys: Ask “why” five times to get to the root cause of a problem. This technique can help you dig deeper into the underlying issues and identify the root cause of a problem. The Five Whys is an excellent technique to support your questioning approach.
  • Problem Statement Template: Use a template to guide you through the process of writing a problem statement. A good problem statement template will prompt you to identify the problem, the impact it’s having on the business, the root cause, and potential solutions.
  • Consult an expert: If you’re struggling to identify the problem or need help framing it in a concise and clear manner, consider consulting an expert in business analysis or strategy. They can provide valuable insights and guidance.

Specific Steps in Developing Problem Statements

Here are some steps to help you develop a problem statement:

  • Identify the problem: Start by identifying the problem you want to solve. The problem should be specific, measurable, and relevant to your goals or objectives.
  • Understand the context: Gather information about the problem and its impact. This could include data, research studies, reports, or input from stakeholders.
  • Define the problem: Clearly define the problem by breaking it down into its key components. Use one of the tools mentioned above to get a comprehensive understanding of the problem.
  • Analyse the problem: Analyse the problem by identifying the root causes, the impact on stakeholders, and the potential consequences of not addressing the problem.
  • Create a problem statement: Use the information gathered in the previous steps to create a problem statement that summarises the problem, its impact, and its root causes. The problem statement should be concise, clear, and focused on the key issues.
  • Refine the problem statement: Review and refine the problem statement to ensure that it accurately and clearly describes the problem and its impact. Refine the language, structure and categorisation as needed.
  • Validate the problem statement: Validate the problem statement by testing it with stakeholders and subject matter experts. Get feedback on the clarity, accuracy, and relevance of the problem statement.

By following these steps, you can develop a problem statement that provides a clear and concise overview of the problem and its impact. This will help you to focus your efforts on developing effective solutions that address the root causes of the problem.

problem solution in business plan

How to Write a Business Plan: Step-by-Step Guide + Examples

Determined female African-American entrepreneur scaling a mountain while wearing a large backpack. Represents the journey to starting and growing a business and needing to write a business plan to get there.

Noah Parsons

24 min. read

Updated April 17, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

  • The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

  • Raise money
  • Grow strategically
  • Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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  • What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

  • A summary of the problem you are solving
  • A description of your product or service
  • An overview of your target market
  • A brief description of your team
  • A summary of your financials
  • Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

  • Supply chain management
  • Manufacturing processes
  • Equipment and technology
  • Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

  • A description of each task
  • The proposed due date
  • Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

  • Website launch date
  • Store or office opening date
  • First significant sales
  • Break even date
  • Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

  • Conversion rates
  • Customer acquisition costs
  • Profit per customer
  • Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

  • Sole proprietor
  • Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

  • Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
  • Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
  • Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
  • Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
  • Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

  • Company logo
  • Business name
  • Value proposition (optional)
  • Business plan title
  • Completion and/or update date
  • Address and contact information
  • Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

  • Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

  • Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
  • Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
  • Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
  • Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
  • Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

  • Did you meet your sales goals?
  • Is spending following your budget?
  • Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

Free business plan templates and examples

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

  • Write a brief executive summary
  • Describe your products and services.
  • Conduct market research and compile data into a cohesive market analysis.
  • Describe your marketing and sales strategy.
  • Outline your organizational structure and management team.
  • Develop financial projections for sales, revenue, and cash flow.
  • Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

  • 1. Not taking the planning process seriously.
  • Having unrealistic financial projections or incomplete financial information.
  • Inconsistent information or simple mistakes.
  • Failing to establish a sound business model.
  • Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

  • How will your business make money?
  • Is there a need for your product or service?
  • Who are your customers?
  • How are you different from the competition?
  • How will you reach your customers?
  • How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Content Author: Noah Parsons

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Start stronger by writing a quick business plan. Check out LivePlan

Table of Contents

  • Use AI to help write your plan
  • Common planning mistakes
  • Manage with your business plan
  • Templates and examples

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Problem-Solving in Business: PROBLEM-SOLVING STEPS

  • ABOUT THIS LIBGUIDE
  • PROBLEM-SOLVING DEFINED AND WHY IT IS IMPORTANT
  • SKILLS AND QUALIFICATIONS NEEDED IN PROBLEM-SOLVING
  • PROBLEM-SOLVING STEPS
  • CASE STUDIES
  • MORE HELPFUL RESOURCES

Problem solvers are constantly trying to proactively shape their environment.

  • DEFINE THE PROBLEM
  • WHAT COULD POTENTIALLY BE THE CAUSE OF THE PROBLEM?
  • CONSIDER VARIOUS SOLUTIONS
  • CHOOSE THE BEST SOLUTION
  • DECIDE HOW TO MEASURE SUCCESS OF THE CHOSEN SOLUTION
  • EVALUATE THE SOLUTION
  • CELEBRATE YOUR SUCCESS!

SOURCE: Cisco Systems, Inc. SWOT Analysis; Date:   October 26, 2020

Porter's Five Forces

  • Threat of New Entrants (effectively, this is “Barriers to Entry”)
  • Competitive Dynamics
  • Supplier Power
  • Buyer Power
  • Threat of Substitutes
  • Competitors
  • Customers/clients
  • Opportunities

SOURCE and for additional information on analysis frameworks and more, please go to: STREETOFWALLS

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HBR IdeaCast podcast series

The Right Way to Solve Complex Business Problems

Corey Phelps, a strategy professor at McGill University, says great problem solvers are hard to find. Even seasoned professionals at the highest levels of organizations regularly...

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Corey Phelps, a strategy professor at McGill University, says great problem solvers are hard to find. Even seasoned professionals at the highest levels of organizations regularly fail to identify the real problem and instead jump to exploring solutions. Phelps identifies the common traps and outlines a research-proven method to solve problems effectively. He’s the coauthor of the book, Cracked it! How to solve big problems and sell solutions like top strategy consultants.

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Welcome to the IdeaCast from Harvard Business Review. I’m Curt Nickisch.

Problem-solving is in demand. It’s considered the top skill for success at management consulting firms. And it’s increasingly desired for everyone, not just new MBA’s.

A report from the World Economic Forum predicts that more than one-third of all jobs across all industries will require complex problem-solving as one of their core skills by 2020.

The problem is, we’re often really bad at problem-solving. Our guest today says even the most educated and experienced of senior leaders go about it the wrong way.

COREY PHELPS: I think this is one of the misnomers about problem-solving. There’s this belief that because we do it so frequently – and especially for senior leaders, they have a lot of experience, they solve problems for a living – and as such we would expect them to be quite good at it. And I think what we find is that they’re not. They don’t solve problems well because they fall prey to basically the foibles of being a human being – they fall prey to the cognitive biases and the pitfalls of problem-solving.

CURT NICKISCH: That’s Corey Phelps. He says fixing these foibles is possible and almost straightforward. You can improve your problem-solving skills by following a disciplined method.

Corey Phelps is a strategy professor at McGill University. He’s also the co-author of the book “Cracked It: How to Solve Big Problems and Sell Solutions like Top Strategy C onsultants.” Corey thanks for coming on the show.

COREY PHELPS: Thank you for the opportunity to talk.

CURT NICKISCH: Another probably many, many biases that prevent people from solving big problems well.

COREY PHELPS: Absolutely.

CURT NICKISCH: What are some of the most common, or your favorite stumbling blocks?

COREY PHELPS: Well, one of my favorites is essentially the problem of jumping to solutions or the challenge of jumping to solutions.

CURT NICKISCH: Oh, come on Corey. That’s so much fun.

COREY PHELPS: It is, and it’s very much a result of how our brains have evolved to process information, but it’s my favorite because we all do it. And especially I would say it happens in organizations because in organizations when you layer on these time pressures and you layer on these concerns about efficiency and productivity, it creates enormous, I would say incentive to say “I don’t have time to carefully define and analyze the problem. I got to get a solution. I got to implement it as quick as possible.” And the fundamental bias I think is, is illustrated beautifully by Danny Kahneman in his book “Thinking, Fast and Slow,” is that our minds are essentially hardwired to think fast.

We are able to pay attention to a tiny little bit of information. We can then weave a very coherent story that makes sense to us. And then we can use that story to jump very quickly to a solution that we just know will work. And if we just were able to move from that approach of what Kahneman and cognitive psychologists called “System 1 thinking” to “System 2 thinking” – that is to slow down, be more deliberative, be more structured – we would be able to better understand the problem that we’re trying to solve and be more effective and exhaustive with the tools that we want to use to understand the problem before we actually go into solution-generation mode.

CURT NICKISCH: Complex problems demand different areas of expertise and often as individuals we’re coming to those problems with one of them. And I wonder if that’s often the problem of problem-solving, which is that a manager is approaching it from their own expertise and because of that, they see the problem through a certain way. Is that one of the cognitive biases that stop people from being effective problem solvers?

COREY PHELPS: Yeah. That’s often referred to as the expertise trap. It basically colors and influences what we pay attention to with respect to a particular problem. And it limits us with respect to the tools that we can bring to bear to solve that problem. In the world of psychology, there’s famous psychologist, Abraham Maslow, who is famous for the hierarchy of needs. He’s also famous for something that was a also known as MaSlow’s axiom, Maslow’s law. It’s also called the law of the instrument, and to paraphrase Maslow, he basically said, “Look, I suppose if the only tool that you have in your toolkit is a hammer, everything looks like a nail.”

His point is that if you’re, for example, a finance expert and your toolkit is the toolkit of let’s say, discounted cash flow analysis for valuation, then you’re going to see problems through that very narrow lens. Now, one of the ways out of this, I think to your point is collaboration becomes fundamentally important. And collaboration starts with the recognition that I don’t have all of the tools, all of the knowledge in me to effectively solve this. So I need to recruit people that can actually help me.

CURT NICKISCH: That’s really interesting. I wonder how much the fact that you have solved a problem before it makes you have a bias for that same solution for future problems?

COREY PHELPS: Yeah, that’s a great question. What you’re alluding to is analogical reasoning, and we know that human beings, one of the things that allows us to operate in novel settings is that we can draw on our past experience. And we do so when it comes to problem solving, often times without being conscious or mentally aware of it. We reach into our memory and we ask ourselves a very simple question: “Have I seen a problem like this before?”

And if it looks familiar to me, the tendency then is to say, “Okay, well what worked in solving that problem that I faced before?” And then to say, “Well, if it worked in that setting, then it should work in this setting.” So that’s reasoning by analogy.

Reasoning by analogy has a great upside. It allows human beings to not become overwhelmed by the tremendous novelty that they face in their daily lives. The downside is that if we don’t truly understand it at sort of a deep level, whether or not the two problems are similar or different, then we can make what cognitive psychologists called surface-level analogies.

And we can then say, “Oh, this looks a lot like the problem I faced before, that solution that worked there is going to easily work here.” And we try that solution and it fails and it fails largely because if we dug a little bit deeper, the two problems actually aren’t much alike at all in terms of their underlying causes.

CURT NICKISCH: The starkest example of this, I think, in your book is Ron Johnson who left Apple to become CEO of JC Penney. Can you talk about that a little bit and what that episode for the company says about this?

COREY PHELPS: So yes, its – Ron Johnson had been hired away from Target in the United States to, by Steve Jobs to help create Apple stores. Apple stores are as many people know the most successful physical retailer on the planet measured by, for example, sales per square foot or per square meter. He’s got the golden touch. He’s created this tremendously successful retail format for Apple.

So the day that it was announced that Ron Johnson was going to step into the CEO role at JC Penney, the stock price of JC Penney went up by almost 18 percent. So clearly he was viewed as the savior. Johnson moves very, very quickly. Within a few months, he announces that he has a strategic plan and it basically comes in three parts.

Part number one is he’s going to eliminate discount pricing. JC Penney had been a very aggressive sales promoter. The second piece of it is he’s going to completely change how they organize merchandise. It’s no longer going to be organized by function – so menswear, housewares, those sorts of things. It’s going to be organized by boutique, so there’s going to be a Levi’s boutique, a Martha Stewart Boutique, a Joe Fresh Boutique and so on.

And it would drop the JC P enney name, they would call it JCP. And he rolls this out over the course of about 12 months across the entire chain of over 1100 stores. What this tells us, he’s so confident in his solution, his strategic transformation, that he doesn’t think it’s worth it to test this out on one or two pilot stores.

CURT NICKISCH: Yeah, he was quoted as saying: “At Apple, we didn’t test anything.”

COREY PHELPS: We didn’t test. Yes. What worked at Apple, he assumed would work at JC Penney. And the critical thing that I think he missed is that JC Penney customers are very different from Apple store customers. In fact, JC Penney customers love the discount. They love the thrill of hunting for a deal.

CURT NICKISCH: Which seems so fundamental to business, right? Understanding your customer. It’s just kind of shocking, I guess, to hear the story.

COREY PHELPS: It is shocking and especially when you consider that Ron Johnson had spent his entire career in retail, so this is someone that had faced, had seen, problems in retailers for decades – for over three decades by the time that he got to JC Penney. So you would expect someone with that degree of experience in that industry wouldn’t make that leap of, well, what worked at Apple stores is going to work at JC Penney stores, but in fact that’s exactly what happened.

CURT NICKISCH: In your book, you essentially suggest four steps that you recommend people use. Tell us about the four steps then.

COREY PHELPS: So in the book we describe what we call the “Four S method,” so four stages, each of which starts with the letter “s”. So the first stage is “state the problem.” Stating the problem is fundamentally about defining what the problem is that you are attempting to solve.

CURT NICKISCH: And you probably would say don’t hurry over that first step or the other three are going to be kind of pointless.

COREY PHELPS: Yeah, that’s exactly the point of of laying out the four s’s. There’s a tremendous amount of desire even amongst senior executives to want to get in and fix the problem. In other words, what’s the trouble? What are the symptoms? What would define success? What are the constraints that we would be operating under? Who owns the problem? And then who are the key stakeholders?

Oftentimes that step is skipped over and we go right into, “I’ve got a hypothesis about what I think the solution is and I’m so obsessed with getting this thing fixed quickly, I’m not going to bother to analyze it particularly well or test the validity of my assumptions. I’m going to go right into implementation mode.”

The second step, what we call “structure the problem” is once you have defined the problem, you need to then start to identify what are the potential causes of that problem. So there are different tools that we talked about in the book that you can structure a problem for analysis. Once you’ve structured the problem for analysis and you’ve conducted the analysis that helps you identify what are the underlying causes that are contributing to it, which will then inform the third stage which is generating solutions for the problem and then testing and evaluating those solutions.

CURT NICKISCH: Is the danger that that third step – generating solutions – is the step that people spend the most time on or have the most fun with?

COREY PHELPS: Yeah. The danger is, is that what that’s naturally what people gravitate towards. So we want to skip over the first two, state and structure.

CURT NICKISCH: As soon as you said it, I was like, “let’s talk about that more.”

COREY PHELPS: Yeah. And we want to jump right into solutioning because people love to talk about their ideas that are going to fix the problem. And that’s actually a useful way to frame a discussion about solutions – we could, or we might do this – because it opens up possibilities for experimentation.

And the problem is that when we often talk about what we could do, we have very little understanding of what the problem is that we’re trying to solve and what are the underlying causes of that problem. Because as you said, solution generation is fun. Look, the classic example is brainstorming. Let’s get a bunch of people in a room and let’s talk about the ideas on how to fix this thing. And again, be deliberate, be disciplined. Do those first stages, the first two stages – state and structure – before you get into the solution generation phase.

CURT NICKISCH: Yeah. The other thing that often happens there is just the lack of awareness of just the cost of the different solutions – how much time, or what they would actually take to do.

COREY PHELPS: Yeah, and again, I’ll go back to that example I used of brainstorming where it’s fun to get a group of people together and talk about our ideas and how to fix the problem. There’s a couple challenges of that. One is what often happens when we do that is we tend to censor the solutions that we come up with. In other words, we ask ourselves, “if I say this idea, people are gonna, think I’m crazy, or people going to say: that’s stupid, that’ll never work, we can’t do that in our organization. It’s going to be too expensive, it’s going to take too much time. We don’t have the resources to do it.”

So brainstorming downside is we we self-sensor, so that’s where you need to have deep insight into your organization in terms of A. what’s going to be feasible, B. what’s going to be desirable on the part of the people that actually have the problem, who you’re trying to solve the problem for and C. from a business standpoint, is it going to be financially attractive for us?

So applying again a set of disciplined criteria that help you choose amongst those ideas for potential solutions. Then the last stage of the process which is selling – because it’s rare in any organization that someone or the group of people that come up with the solution actually have the power and the resources to implement it, so that means they’re going to have to persuade other people to buy into it and want to help.

CURT NICKISCH: Design thinking is another really different method essentially for solving problems or coming up with solutions that just aren’t arrived at through usual problem-solving or usual decision-making processes. I’m just wondering how design thinking comes to play when you’re also outlining these, you know, disciplined methods for stating and solving problems.

COREY PHELPS: For us it’s about choosing the right approach. You know what the potential causes of a problem are. You just don’t know which ones are operating in the particular problem you’re trying to solve. And what that means is that you’ve got a theory – and this is largely the world of strategy consultants – strategy consultants have theories. They have, if you hear them speak, deep understanding of different types of organizational problems, and what they bring is an analytic tool kit that says, “first we’re going to identify all the possible problems, all the possible causes I should say, of this problem. We’re going to figure out which ones are operating and we’re going to use that to come up with a solution.” Then you’ve got problems that you have no idea what the causes are. You’re in a world of unknown unknowns or unk-unks as the operations management people call them.

CURT NICKISCH: That’s terrible.

COREY PHELPS: In other words, you don’t have a theory. So the question is, how do you begin? Well, this is where design thinking can be quite valuable. Design thinking says: first off, let’s find out who are the human beings, the people that are actually experiencing this problem, and let’s go out and let’s talk to them. Let’s observe them. Let’s immerse ourselves in their experience and let’s start to develop an understanding of the causes of the problem from their perspective.

So rather than go into it and say, “I have a theory,” let’s go the design thinking route and let’s actually based upon interactions with users or customers, let’s actually develop a theory. And then we’ll use our new understanding or new insight into the causes of the problem to move into the solution generation phase.

CURT NICKISCH: Problem-solving – we know that that’s something that employers look for when they’re recruiting people. It is one of those phrases that, you know, I’m sure somebody out there has, has the title at a company Chief Problem Solver instead of CEO, right? So, it’s almost one of those phrases that so over used it can lose its meaning.

And if you are being hired or you’re trying to make a case for being on a team that’s tackling a problem, how do you make a compelling case that you are a good problem solver? How can you actually show it?

COREY PHELPS: It’s a great question and then I have two answers to this question. So one is, look at the end of the day, the proof is in the pudding. In other words, can you point to successful solutions that you’ve come up with – solutions that have actually been effective in solving a problem? So that’s one.

The second thing is can you actually articulate how you approach problem-solving? In other words, do you follow a method or are you reinventing the wheel every time you solve a problem? Is it an ad hoc approach? And I think this issue really comes to a head when it comes to the world of strategy consulting firms when they recruit. For example, Mckinsey, you’ve got the Mckinsey problem-solving test, which is again, a test that’s actually trying to elicit the extent to which people are good applicants are good at solving problems

And then you’ve got the case interview. And in the case interview, what they’re looking at is do you have a mastery over certain tools. But what they’re really looking at is, are you actually following a logical process to solve this problem? Because again, what they’re interested in is finding- to your point – people that are going to be good at solving complex organizational problems. So they’re trying to get some evidence that they can demonstrate that they’re good at it and some evidence that they follow a deliberate process.

CURT NICKISCH: So even if you’re not interviewing at a consulting firm, that’s a good approach, to show your thinking, show your process, show the questions you ask?

COREY PHELPS: Yeah, and to your point earlier, at least if we look at what recruiters of MBA students are saying these days, they’re saying, for example, according to the FT’s recent survey, they’re saying that we want people with really good problem solving skills, and by the same token, we find that that’s a skill that’s difficult for us to recruit for. And that reinforces our interest in this area because the fundamental idea for the book is to give people a method. We’re trying to equip not just MBA students but everybody that’s going to face complex problems with a toolkit to solve them better.

CURT NICKISCH: Corey, this has been really great. Thank you.

COREY PHELPS: Thanks for the opportunity. I appreciate it.

CURT NICKISCH: That’s Corey Phelps. He teaches strategy at McGill University, and he co-wrote the book “Cracked It: How to Solve Big Problems and Sell Solutions Like Top Strategy Consultants.”

This episode was produced by Mary Dooe. We got technical help from Rob Eckhardt. Adam Buchholz is our audio product manager.

Thanks for listening to the HBR IdeaCast. I’m Curt Nickisch.

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the solution in a business plan

The Solution in a Business Plan

…our solution to the customers problem is…

The Solution is about the Customer

The solution is all about the customer not the product. Consequently this is not the place to put all the technical detail about your product. It is important to realize that this section is about what you do and how you can solve the problem the customer has.

There is no set style for the solutions statement of the business plan, a few paragraphs together with bullet points should be sufficient to explain what it is you do, the solution you provide, and why it solves the customer problem.

Keep the description simple, if possible tell a story as to how a customer solved their problem using your solution. Remember a good story will help people remain engaged with your business plan. Avoid technical jargon and highlight the customer benefits not the technical benefits of your solution.

Additional Information

This post is part of a series of posts under the heading the Contents of a Business Plan Guide . The aim of the guide is to explain what each section of a simple business plan should include and how each of those sections relates to each other. The next post in this series is presenting the product and technology .

About the Author

Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

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How to Write a Business Project Solution Plan

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Business case documents and project plans can be used to identify and propose solutions for a variety of business problems. The difference is that while a business case document presents a number of possible solutions to a business problem, a project plan proposes a single solution. Because there’s typically more than one way to solve a business problem, a business case document can be a good starting point. Once the business owner selects the best solution, project plans that define action steps for solving the problem can then be developed.

Problem Identification and Analysis

Identify the root cause and contributing factors to a problem by conducting a cause-and-effect analysis. Start with a clear, written description of the problem. State the exact problem, including details such as who is involved and when and where it occurs or occurred. Clarity is essential in order to develop a comprehensive understanding of the problem. Next, identify and describe how tangible and intangible factors such as equipment, business processes or attitudes may be contributing to the problem. For example, a problem such as high employee turnover might be related to a general failure to hire the right type of person for the job. Insufficient HR training, ineffective skills testing, and communications bottlenecks between department managers and HR might all be contributing factors.

Brainstorm Possible Solutions

Most business problems have numerous solution options. In this phase of developing a project solution plan you should identify and explore them all. Start by brainstorming to create a list of possible solution options, each addressing an identified contributing factor. Describe each option in as much detail as possible. For example, possible solutions for reducing high employee turnover might include establishing a formal HR department or additional training to bolster the business owner or other employees currently responsible for interviewing and hiring new employees. Implementing computerized skills testing procedures or developing a communications protocol for HR and department managers are additional alternative solutions.

Analyze and Prioritize

Conduct a cost-benefit analysis for each possible solution and then prioritize each solution according to how successfully it solves the problem in the most cost-effective way. The cost-benefit analysis for each solution should include a full cost estimate, financial and intangible benefit projections, and an estimate or time frame for when the solution can be expected to pay off. Although unlikely, it’s possible that the most cost-effective solution may be to take no action at the current time. This depends on the severity of the problem and its potential long-term effect on business efficiency and profitability.

Create a Project Plan

The final step in writing a business project solution plan is to choose a solution and create a project plan. A thorough solution plan includes project goals, a list of deliverables required to meet project goals, and a schedule or timeline for completing the project. Supporting documentation such as personnel and resource requirements, a project communications strategy, and a risk identification and management plan should also be created and incorporated into the project plan.

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Based in Green Bay, Wisc., Jackie Lohrey has been writing professionally since 2009. In addition to writing web content and training manuals for small business clients and nonprofit organizations, including ERA Realtors and the Bay Area Humane Society, Lohrey also works as a finance data analyst for a global business outsourcing company.

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America's facing a retirement disaster. There's a better way.

  • Australia's superannuation system mandates employer-funded retirement contributions.
  • US retirement plans, by contrast, depend on employee contributions to accounts like 401(k)s. 
  • If the US adopted Australia's retirement model, it could impact wage levels.

Insider Today

For many around the world, retirement can be a mixed bag .

Australian retirees rate their retirement happiness at 70 out of 100, according to a survey of 1,000 Australians over 60 in February by the independent researcher YouGov and investment management company Challenger Limited. Money was ranked behind good physical health as the key to a happy retirement.

Meanwhile, the US retirement system has become anxiety-inducing for many, as older adults struggle to make ends meet . More than half of Americans over the age of 65 are earning under $30,000 a year, according to a report from Sen. Bernie Sanders published in March and based on National Retirement Risk Index data.

What's more, Pew Research Center data shows that Americans over 75 are the fastest-growing age group in the workforce, a demographic that could double in the next decade. That's because many can't afford to stop working.

In the US, retirement accounts are a company benefit that employees can choose to contribute some of their paychecks to throughout their careers. Companies are not federally required to offer any kind of retirement savings account for employees or provide any monetary support for retirees. And many Americans living paycheck to paycheck aren't able to save enough to stop working.

Australia , however, requires that employers make regular contributions to a retirement fund for each employee — a system called superannuation.

Catherine Reilly, a fellow at the financial research firm TIAA Institute and a non-resident scholar at Georgetown University's Center for Retirement Initiatives, said Australia's system makes sure all adults have a retirement fund.

"Everybody is put into a plan," she said. "Whereas in the US, you only get put into a plan if you'd work for an employer that offers it."

Seventy-one percent of nonretired Americans said they are at least moderately worried about being able to fund their retirement , according to a Gallup poll of 1,013 US adults in April 2023.

Reilly said there are structural differences in how America and Australia handle savings for older adults. And while it may be tough to implement Australia's system halfway around the world — but the US could get close, she said.

Australian retirement system puts saving responsibility on employers, not employees

America's current retirement infrastructure includes two major categories: defined contribution plans and Social Security .

Defined contribution plans , which include 401(k) and IRA accounts allow employees to save and invest money that they make throughout their career, usually by depositing a percentage of their regular paycheck directly into the accounts.

Companies might also contribute to an employee's 401(k), but they are under no federal requirement to do so. The retirement accounts an employee has access to and what benefits they retain after they stop work all depend on what retirement package an individual company offers.

In a 2024 letter to investors , BlackRock CEO Larry Fink said the US retirement system puts undue pressure on employees to decide how much money to save and invest. With the rising cost of living in many US cities, it can be difficult for Americans to predict how much money they are going to need, an issue Fink called an "impossible math problem."

Fink encouraged American policymakers to study Australian superannuation , saying the "benefits could be enormous for individual retirees." 

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Social Security also comes into play when Americans retire, providing monthly government income benefits based on an individual's reported earnings. The federal insurance program is funded by taxes and provides income to retirees and workers with disabilities. Many retirees collect Social Security checks in addition to living off their 401(k) savings.

However, the Social Security trust is expected to be depleted by the mid-2030s unless there's an invention.

Traditional fixed-income pensions are no longer a common company benefit in the US, but are still offered by select government and public service jobs .

In Australia, however, companies are legally required to contribute 11% of an employee's monthly paycheck into their retirement account. This money can go into stocks, property, cash, or bonds — the employee has a choice. Employees can also contribute money, but much of the savings responsibility falls on their employer.

The employer contribution amount is set to increase to 12% next year.

Once they reach retirement age, which is between 55 and 60, depending on birth year, Australians can access the fund with their savings and investment earnings.

"It does level the playing field because everybody is put into a plan," Reilly said, adding that Australians have more choice in where and how their retirement money is saved.

As Reilly explained, superannuation also allows retirees to access their money all in one place.

This differs from the American system, where retirees' money is often held between a 401(k), other accounts, and outside investments. If an American employee works at multiple different companies during their career, Reilly said it can also complicate their retirement funds.

Additionally, Australian government age pensions aren't the same as Social Security. Retirees must meet a low enough asset criteria to access the age pension. Reilly said the more limited pension might be a disadvantage of the Australian system because many people's retirement is almost entirely dependent on their superannuation funds.

If the US adopted superannuation, it could impact employee salaries

Although the Australian government sets the terms for superannuation, it is managed by the private sector. Employers manage the retirement funds for their employees without much political oversight.

If America adopted superannuation, Reilly expects the system would work similarly — the federal government could establish what percentage of an employee's income employers need to contribute, but then companies could organize the retirement funds on their own.

She pointed to pooled-employer plans , a retirement fund strategy that is already being tried in the US, allowing multiple companies to contribute to a single retirement fund for an employee if that person chooses to work at different companies throughout their career. Some individual states, such as California and Colorado, also require that employees are automatically enrolled in some kind of retirement plan.

"In the US, the infrastructure for having the private sector manage these funds — that all exists already," Reilly said. "And I think that would be a sensible way to do things."

Still, Reilly cautioned that applying Australia's retirement system to the US could negatively affect employee wages . Because, for companies, it would be "very unpopular," she said.

When a company hires someone new, she said they consider the total cost of employing that person. This includes salary, bonuses, and benefits . If US employers become legally required to contribute to retirement funds, Reilly said companies may lower their employees' salaries to offset this new cost.

Still, a system like superannuation could help ensure a retirement fund for the 56 million private sector employees who don't have retirement benefits through their employer, The Pew Charitable Trust reported in January.

Did you retire and later choose to return to work? Do you feel like you can't retire because of your financial situation? Reach out to this reporter at [email protected] .

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  2. How do I write a problem statement? Top tips and examples to help you

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  1. How to Create a Problem and Solution Statement

    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.

  2. How To Write The Best Problem Statement

    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.

  3. Business Problem Statement With Examples

    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 terms. It is highly recommended to avoid industrial lingo and buzzwords. Write a 3-5 sentences long summary, avoid writing more than it. 2.

  4. 50 Business Problem Statement Examples [+Tips To Write]

    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.

  5. How to Write a Problem Statement (With 3 Examples)

    Example Problem Statement 3 The Stakeholder Problem Statement. Example: 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.

  6. 10 Step Process for Effective Business Problem Solving

    By following this 10-step process, you can develop your problem-solving skills and approach any issue that arises with confidence. 1. Define the problem. When a problem arises, it can be very easy to jump right into creating a solution. However, if you don't thoroughly examine what led to the problem in the first place, you may create a ...

  7. Effective Problem Statement Examples in Business

    A common mistake businesses make is that they do not give the problem as much importance as the solution. Instead, most business owners get excited about the solution — but in doing so, they tend to forget to explain why the problem is important. A well-articulated problem gives your solution more value. It makes your entire plan 10x more ...

  8. What is a Solution Statement? (Definition and Examples)

    They had a straightforward solution to an apparent problem. The E-Scooter Solution Statement 🛴. When defining the solution in your business plan, it needs to be kept short, simple, engaging, to the point, and easy to understand. Steer clear of complicated technical terms. Rule of thumb? Even your grandma should get it. In the case of Lime ...

  9. Mastering the Art of Business Problem Statements: A Comprehensive Guide

    For example, problems related to growth, innovation, cost reduction, or risk management. Industry or market: Categorise the problem statement based on the industry or market in which the business operates. For example, problems related to competition, changing customer needs, or regulatory compliance. Business architecture.

  10. How to Write a Business Plan: Guide + Examples

    Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. A good business plan is much more than just a document that you write once and forget about. It's also a guide that helps you outline and achieve your goals. After completing your plan, you can ...

  11. Problem-Solving in Business: PROBLEM-SOLVING STEPS

    You're essentially translating your solution into a plan, complete with milestones and goals. Without these, you've simply made a blind decision, with no way to track success. You need those goals and milestones to make your plan real. The key to effective problem-solving in business is the ability to adapt.

  12. The Right Way to Solve Complex Business Problems

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  13. How to master the seven-step problem-solving process

    When we do problem definition well in classic problem solving, we are demonstrating the kind of empathy, at the very beginning of our problem, that design thinking asks us to approach. When we ideate—and that's very similar to the disaggregation, prioritization, and work-planning steps—we do precisely the same thing, and often we use ...

  14. 7 Steps to Effective Business Problem Solving

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    It also comes in handy should you find that crunching old data is leading to stale solutions. Most of the problem-solving teams we are involved with have twin dilemmas of uncertainty and complexity, at times combined as truly "wicked problems." 7 A term coined in a now famous 1973 article: Horst W. J. Rittel and Melvin Webber, "Dilemmas ...

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  17. The Solution in a Business Plan

    The Solution is about the Customer. The solution section of the business plan can only come after the customer problem has been defined. Trying to present a solution in search of a problem is a mistake and is a tough sell to present to an investor. The solution has to match the customer problem.

  18. Define the problem you solve

    And fortunately for me, I have a solution to that problem. So as you're articulating your business's problem and how you solve it, make sure it's a clear and compelling statement for your customer.

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    The better you understand who will buy your product or service and why, the easier it will be to describe the problem your business solves. To arrive at your target customer, we recommend working out a customer persona, which is a precise, detailed description of the customer you're most likely to attract. You'll want to understand this person ...

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