Business Problem Statement: Examples + Free Templates

You’ve been asked to write a business problem statement for a proposal, report, business plan, or another business document. And here’s the thing: your business probably has several problems at any given time.

Sales may be dropping. Customers may be complaining. Or certain tasks may be taking longer than they should. But which issue should you actually write about?

Should you focus on one problem or mention several? How much evidence do you need? And should you explain the cause if you’re not completely sure about it yet?

In this guide, I’ll show you how to write a business problem statement step by step using the 5W2H framework. I’ll also walk through practical examples and give you two templates you can use for your own draft.

What is a business problem statement?

A business problem statement is a short description of a specific problem a business is facing. It tells the reader what the problem is, who or what it affects, and why it matters.

It is usually a few sentences or a short paragraph. Depending on the problem, you can include who is affected, the impact it has on the business, and any useful data that shows how serious the problem is.

Its job is to define the problem clearly before you decide what should be done about it.

Now, let’s understand how to build one step by step.

How to write a business problem statement in 4 steps

Follow these four steps, and by the end, you’ll have a clear problem statement of your own.

To make the process easier to follow, we’ll use the same example throughout: a small bakery where evening sales have been falling.

Step 1: Start with the issue you’ve noticed

Start by picking the issue you want to understand better.

It could be something like:

• Product returns have increased
• Inventory keeps running out
• Delivery errors are happening more often
• Employees are spending too much time on manual work
• Recurring cash flow problems are affecting operations

For our bakery example, we’ll start with:

You don’t need to know why it is happening yet. At this stage, you’re simply choosing what you want to investigate.

What if you have several issues?

Don’t try to put all of them into one problem statement. Write them down separately, then choose one to investigate first.

I’d start with the issue that either:

1. Has the biggest effect on the business, or
2. Needs attention most urgently.

For example, our bakery might also have rising ingredient costs and slow service. But if falling evening sales are hurting the business the most right now, that’s where we would start.

You can come back to the other issues later and write separate problem statements if needed.

Once you’ve chosen one, the next step is to break it down.

Step 2: Break down the issue using 5W2H

Now look at the issue from seven angles using the 5W2H framework: What, Who, Where, When, Why, How, and How much.

For our bakery:

Some answers may still be guesses at this point. That’s fine.

If you don’t know the answer to one of the seven questions, leave it open and investigate it rather than filling the gap with an assumption.

The “Why?” question is especially important here. You may have an idea about what is causing the problem, but treat it as something to check until you have evidence.

Step 3: Check what the evidence actually says

Now check whether what you suspect is actually happening.

For an existing business, I’d start with internal records because they show what is happening in your own business.

Depending on the issue, that might include:

• Sales or transaction records
• Inventory and stock records
• Complaints and customer feedback
• Refunds and returns
• Order or delivery times
• Support tickets
• Scheduling or staffing records
• Employee observations

Employee observations can help you spot a pattern, but I’d still compare them with records when possible before treating them as proof.

For our bakery, suppose we check the sales and inventory data and find that three of the five best-selling products regularly sell out before 5 p.m.

We also find that evening transactions are down 12% over the past three months compared with the same three-month period last year.

Now we know the issue is not just a guess. The records show that popular products are selling out before the evening rush, while evening transactions have also declined.

When possible, use the evidence closest to the problem. If you’re investigating stockouts, for example, inventory and transaction records will usually tell you more than a broad industry statistic.

Do you need numbers in every problem statement?

No.

Use numbers when they help show how often the problem happens, how many people or orders it affects, or how much impact it has.

That could mean:

• Customers affected
• Hours lost
• Canceled orders
• Complaints received
• Revenue lost
• Higher costs

Also, make sure your comparison is fair.

If your business is seasonal, comparing one busy month with a slow month may give the wrong picture. In that case, comparing the same period last year or another similar period may be more useful.

If you don’t have a trustworthy number, don’t make one up just to make the statement sound stronger.

One more thing: don’t guess the cause. If you know products are selling out but you still don’t know why, leave the cause out for now. Stick to what the evidence supports.

With the facts clear, the next step is to turn them into the final problem statement.

Step 4: Write your business problem statement

Now bring the important facts together into a short statement.

A useful problem statement usually does three things: describes what is happening, identifies who or what is affected, and shows why the problem matters using evidence when available.

For our bakery, that could become:

Notice that we didn’t use every detail from the 5W2H exercise. That’s fine. Pick only the details that help the reader understand the problem clearly.

We also didn’t say the stockouts caused the entire 12% decline in evening transactions. The records show both are happening, but unless we have evidence proving that relationship, we shouldn’t present it as fact.

Should you include the solution in a problem statement?

Usually, no. Keep the problem and solution separate.

For example, we wouldn’t write:

That jumps straight to one solution. We still don’t know whether the right fix is changing production levels, adjusting the baking schedule, improving demand forecasting, changing the product mix, or something else.

Define the problem first. Then decide how to solve it.

If your business plan, business proposal, or report has a Problem and Solution section, you can discuss the solution right after the problem statement. Just keep the two clearly separate.

Quick check before you finalize it

• Does the statement focus on one main problem?
• Can you support the important claims with evidence?
• Have you avoided stating an unproven cause as fact?
• Could someone unfamiliar with the business understand the problem without extra explanation?

If the answer is yes to all four, you’re ready to move on.

Now, here are two simple templates you can use to write your own.

Business problem statement template

Use these templates as a starting point, not something you have to follow word for word. You can shorten, reorder, or add details as needed, as long as the statement clearly explains the problem and why it matters.

I’d use a template only after you’ve worked through the problem and checked the evidence. The template simply helps you put that thinking into a clear format.

Basic template

Use this when you need a short problem statement for a slide, short proposal, or internal note.

If you have useful evidence, add a second sentence:

Detailed template

Use this when you have more room, such as in a business plan, internal proposal, or business report.

You do not need to use every part. If the impact is already clear, keep the statement short. And if you cannot support a number or cause, do not add it just to make the statement sound stronger.

Optional: If the current impact does not fully show why the problem needs attention, add one sentence about what could happen if the problem continues.

Now, let’s look at how these templates work across different types of business problems.

Business problem statement examples

The examples below are illustrative. The numbers are included to show how evidence can strengthen a problem statement and do not represent actual businesses.

Retail business

Using the basic template:

This works because the problem, affected customer, and business impact are clear without needing much extra detail.

Restaurant

Using the detailed template:

The added time and evidence help show when the problem is most serious and how it affects the customer experience.

Service business

Using the basic template with evidence:

The evidence adds weight to the short statement without making it too long.

E-commerce

Using the detailed template:

This version needs more detail because the problem involves a process, a known bottleneck in that process, and an operational consequence that all connect.

These examples show that the structure can stay simple while the level of detail changes with the problem. Use the basic version when the issue is easy to explain, and the detailed version when the reader needs more context or evidence to understand what is going wrong.

Conclusion

A good business problem statement does not need complicated wording. It needs a problem that is clear and claims you can support.

Start with the issue, break it down using 5W2H, check what the evidence shows, and write only what you know. If you still don’t know the cause, leave it out rather than guessing.

If you still need help writing yours, Upmetrics can help you work through the problem statement in your business plan. You can also download our problem statement template and use it to create your first draft.

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