Running a business is an extremely tedious task. Almost always, there’s a problem or two that needs your immediate attention. Addressing these problems head-on to find their solutions is a part of the process.
Luckily, there’s a tool that can help you with that: a business problem statement.
You may know how necessary it is to write a business plan for your company. What you may not know of, however, are the tools and techniques that can help you solve your business problems.
A business problem statement can help analyze the problem and come up with new and creative ways to solve it.
Essentially, it enables you to approach the problem in a more systematic, measurable, and objective way.
In this article, we will see what is a business problem statement and how you can write one yourself.
Table of Contents
What is a Business Problem Statement?
A business problem statement states the problem that a company is facing. Also, it involves an intricate analysis of the problem, details relevant to the situation, and a solution that can solve the problem. This is a simple yet effective way to present a problem and its solution concisely.
In other words, it is a communication tool that helps you visualize and minimize the gap between what’s ideal vs. what’s real. Or to put it in business lingo, the expected performance, and the real performance.
How to Write a Business Problem Statement?
Before writing a business problem statement, it is crucial to conduct a complete analysis of the problem and everything related. You should know everything about the problem to describe it clearly and also suggest a solution to it.
To make things easy for you, we have explained the four key elements to help you write your business problem statement. They include:
1. Define the problem
Defining the problem is the primary aspect of a business problem statement. Summarize your problem in simple and layman’s terms. It is highly recommended to avoid industrial lingo and buzzwords.
Support your summary with insights from both internal and external reports to add credibility and context. Write a 3-5 sentence long summary, avoid writing more than it.
For example: “The manual auditing process is causing delays and errors in our finance department, leading to increased workload and missed deadlines.”
2. Provide the problem analysis
Here, explain the background of the problem. Add relevant statistics and results from surveys, industry trends, customer demographics, staffing reports, etc, to help the reader understand the current situation. These references should describe your problem and its effects on various attributes of your business.
Avoid adding too many stats in your problem statement, and include only the necessary ones. It’s best to include no more than three significant stats.
3. Propose a solution
Your business problem statement should conclude with a solution to the previously described problem. The solution should describe how the current state can be improved.
The solution must not exceed two sentences. Also, avoid including elaborate actions and steps in a problem statement, because it will lead to the solution looking messy. These can be further explained when you write a project plan.
4. Consider the audience
When you start writing your business problem statement, or any formal document, it is important to be aware of the reader. Write your problem statement considering the reader’s knowledge about the situation, requirements, and expectations.
While your gut feeling can be helpful, focusing on facts and research will lead to better solutions. If the readers are unfamiliar with the problem’s context, ensure you introduce it thoroughly before presenting your proposed solutions.
How to Develop a Business Problem Statement
A popular method that is used while writing a problem statement is the 5W2H (What, Why, Where, Who, When, How, How much) method. These are the questions that need to be asked and answered while writing a business problem statement.
Let’s understand them in detail.
- What: What is the problem that needs to be solved? Include the root cause of the problem. Mention other micro problems that are connected with the macro ones.
- Why: Why is it a problem? Describe the reasons why it is a problem. Include supporting facts and statistics to highlight the trouble.
- Where: Where is the problem observed? Mention the location and the specifics of it. Include the products or services in which the problem is seen.
- Who: Who is impacted by this problem? Define and mention the target audience, staff, departments, and businesses affected by the problem.
- When: When was the problem first observed? Talk about the timeline. Explain how the intensity of the problem has changed from the time it was first observed.
- How: Describe how the problem is observed. Include signs or symptoms of the problem and discuss the observations you made during your analysis.
- How much: How often is the problem observed? If you have identified a trend during your research, mention it. Comment on the error rate and the frequency and magnitude of the problem.
Business Problem Statement Framework
A problem statement consists of four main components. They are:
- The problem: The problem statement begins with mentioning and explaining the current state.
- Who it affects: Mention the people who are affected by the problem.
- How it impacts: Explain the impacts of the problem.
- The solution: Your problem statement ends with a proposed solution.
Business Problem Statement Templates
Below is a common template used for writing a problem statement. It includes the four key components mentioned in the above framework.
Template 1:
The problem of ________________, affects ___________________, the impact of which is __________________, so an apt solution for this is __________________.
Template 2:
Template 3:
Business Problem Statement Examples
Here are a few problem statement examples to help you understand how to write your business problem statement:
Example 1: A problem statement by a software company
The problem of a manual auditing process affects the finance department and the staff as the process creates a lot of hassle because of the searching and verifying of physical documents.
The impact of this is a lengthy auditing process where many mishaps and misplacements of documents happen. A successful solution would be to create an online database with search filters that would make it easy to find and verify documents.
Example 2: A problem statement by a manufacturing company
The problem of an inefficient manual assembly process affects the productivity of the company, and the workers have to manually install some parts, which consumes more time.
This impacts the production goals and incremental loss for this year. An efficient solution would be to install conveyor belts to optimize the manufacturing process.
Solve Problems Faster with a Business Problem Statement
Writing a problem statement can be tricky. However, building one can help you define the problems and find solutions faster.
It even helps you present a concise but detailed way description of the problem and its potential solutions.
Use the above template given by Upmetrics to create a problem statement for your business and eliminate the need to go through complex documents.
