What Is a Problem Statement?

A problem statement is usually one or two sentences that describe the issue that your solution will solve. A problem statement will, in general, highlight the negative aspects of the current situation and explain why they are important.

Let’s use the example of Netflix, which was created to solve the problem of needing to go to the video store to rent a movie.

Netflix aimed to eliminate video stores entirely by sending movies in an envelope to your mailbox, which you could keep for as long as you wanted. Netflix’s problem statement would most likely be as follows: “Visiting the video store is a pain. People hate having to travel back and forth to rent a movie, and they hate paying late fees even more. ”

In simple terms, when approaching investors, Netflix would, for example, interoperate the problem and solution as follows:

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.”

And just like that, you’ve given a potential investor an easy-to-understand problem/solution statement in only two sentences.
What matters here is what we don’t include. We’re not talking about cost savings or having access to streamed content on multiple devices. This is because we want to intrigue the audience’s interest right away with our most compelling value proposition.

So how do you create a problem statement for your business?

Remember how your English teacher probably taught you about the five Ws when you were in school? (who, what, where, when, and why). These are the questions that must be addressed when creating a problem statement. Check that you have included the five Ws in your work before finalizing your problem statement. Then, double-check that you’ve included the 2 important “h”s as well (how and how much).

Each of the following items should be addressed appropriately in the problem statement:

  • What is the problem that needs to be solved?
  • Why is it a problem? (highlight the pain)
  • Where is the problem observed? (location, products)
  • Who is impacted? (customers, businesses, departments)
  • When was the problem first observed?
  • How is the problem observed? (symptoms)
  • How often is the problem observed? (error rate, magnitude, trend)

A problem statement describes the issue that a company is facing as well as the proposed solution. It can also serve as a foundation for developing compelling business cases and demonstrating the need for specific projects. Before your company advertises a solution, make sure your customers are aware of the problem you are attempting to solve, which is communicated through your problem statement.