How to Write a Problem Statement [Startup Edition]

Matt Preuss
Marketing Manager

At the core of every business or startup is a big problem they are trying to solve. Founders are putting forth their expertise and skills to build a solution to help solve this big problem.

In the early days of building a business, many investors and stakeholders will ask to see a business plan to address how you are attacking a market and solving a problem. When going out to raise capital (from angels, VCs, etc.) making sure that investors clearly understand the problem you are solving is crucial.

One of the key aspects of a business plan is the problem statement. Learn more about business problem statements and how to craft one for your business below:

What is the Purpose of a Problem Statement?

As we mentioned above a problem statement is part of a business plan. It should be an overarching thing you are trying to solve that guides most decisions you are making as a business — product development, go-to-market strategies, customer support, etc.

A business problem statement defines exactly what problem you are helping your customers solve. It should be fairly simple but can be the backbone of your decision-making and business strategy.

Note: While you might not necessarily be sharing a “problem statement” with investors during a fundraise, it oftentimes can be useful when crafting your pitch deck. Learn more about crafting your first pitch in our post, “Tips for Creating an Investor Pitch Deck

Best Practices for Writing a Problem Statement

A problem statement is fairly short and straightforward, there are best practices that you’ll want to keep in mind. An erratic or longwinded problem statement can lead to more confusion and questions, in turn leading to more work for you as a founder.

Check out our best practices and tips for writing your problem statement below:

1. Clearly Define The Problem

First and foremost, you need to make sure that the problem you are solving is incredibly clear and well-defined. If you are wishy-washy with the problem, that will show a lack of conviction in the eyes of an investor or stakeholder that might be evaluating your business plan.

For example, let’s say we are a software company called Adventure App that is helping campers find lesser-known camping spots. Our problem could be, “Finding a camping spot requires existing knowledge of a location and deciphering of local rules, boundaries, and signage that can be intimidating to new campers.”

2. Assess Who The Problem Impacts

Naturally, a problem statement solves the big problem you are helping your customers accomplish. However, a problem statement can have an impact on different stakeholders and aspects of your business. A few questions you might want to ask yourself when understanding who your problem statement impacts:

  • How are your customers impacted by the problem?
  • How are your employees impacted by this problem?
  • How is your overall business impacted by this problem?

Using our Adventure App example above, if we are helping customers find more camping spots, our employees are likely impacted because they enjoy the outdoors and camping themselves and have empathy for the customers.

Related Reading: How to Build A Startup Culture That Everybody Wants

3. Provide Possible Solutions

Finally, a well-written problem statement should offer a solution and detail why it will help solve the problem. There might not necessarily be a single solution but an approach as to how you and your team will execute on the solution.

Continuing on with our Adventure App example, our solution might be “Creating easy-to-use software and tools that anyone can access from the outdoors to enhance their experience.

3 Ways To Enhance Your Problem Statement

Once you have your first iteration of a problem statement down on paper, it is time to start dialing in the statement and make sure it is something that is easily understood by investors and stakeholders, even if you are not in the room to explain the specifics.

1. Highlight The Pain Points Of The Problem

When crafting your problem statement you want to make sure anyone reading it can really understand the pain points that your potential customers are facing. Being able to hone in the specifics will help anyone understand the problem, even if it might not be one they experience themselves.

For example (continuing with our campsite finding software), you might initially write something like:

“Finding a campsite is a pain.”

However, you can go deeper with the problem by adding more specific pain points like:

“Finding a campsite requires driving to a remote location with little internet access, deciphering different signage and boundaries, and exploring in the dark until you find a spot to set up camp which can be a barrier for many to enjoy the outdoors.”

2. Add Empathy To Your Story

Going hand-in-hand with the pain points from above, add empathy to make sure that anyone reading it understands the problem.

When pitching an investor, they might have a surface-level understanding of your problem but to really make sure they feel the pain your customers are feeling you need to make the true pain points are truly there. This will help investors find empathy for the end-users and paint a picture of why a solution is needed and why your solution is the one.

Using our example, many investors might not know much about camping. Making sure they can understand the headache of aimlessly driving around in the dark looking for a spot is important.

3. Explain The Benefits of Your Proposed Solutions

Now that you have built up the problem and given the readers an understanding of why there needs to be a solution you need to dial in the benefits of your solution and explain why you are the ones that should be solving the problem. Remembering that we want to keep the problem statement succinct, you need to be intentional with the wording of your solution. The rest of your business plan or pitch deck can be used to dive deeper into your solution and the economics/strategy/etc. behind your business.

Start Your Fundraise with Visible

Have your problem statement and business plan in place and ready to go out and raise capital? Let us help. You can find investors with Visible Connect (our investor database), add them to your Fundraising CRM, share your pitch deck, and track how potential investors are engaging with your fundraise.

Give it a try for free for 14 days and kick off your fundraise here.

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