Describe your products and services

How to Create a Convincing Problem and Solution Statement

Tim Berry

5 min. read

Updated March 8, 2023

Female entrepreneur speaking with a colleague about the problem she is solving for customers with her business idea.

Many experts recommend introducing your business plan with definitions of the problem that your business solves and the solution your business offers.

That’s called “problem and solution,” and it’s quite common and quite useful—but it’s also too often an opportunity wasted.

Don’t just describe the problem and solution. Make people care.

The problem as a story

A couple of weeks ago, a startup with technology developed at Georgia Tech called Lumenostics pitched a monitoring system that helps cancer survivors avoid the onset of lymphedema, a debilitating and disfiguring problem of swollen limbs.

They started with a picture of a woman named Ann, who had beaten breast cancer. They told us she has a one-in-five chance of getting lymphedema, and they showed us pictures of the terrible swelling people suffer. All of which made us care. We felt what she must be feeling.

Then, as they went on with the numbers behind that story, we felt the pain. We needed the numbers, of course, but numbers alone wouldn’t have had the same impact.

Stories are the oldest and arguably best way to communicate ideas, truth, beliefs, and even numbers. Stories are powerful. Think of the key stories that are the foundation of the great religions. Or, think about the stories behind the phrases “sour grapes,” “the fox in the henhouse,” and “the emperor’s new clothes.” They all have power because they communicate. They resonate. We recognize their truths.

“All human beings have an innate need to hear and tell stories and to have a story to live by.”

Harvey Cox wrote, “All human beings have an innate need to hear and tell stories and to have a story to live by.”

When the problem is untreated sewage in developing countries, the story starts with a picture of the stinky canals in Bangkok. When the problem is related to services for families of autistic kids, the story starts with a typical family and what this means for them. After we care, they get to the details.

Every business sale is related to a problem. In every case, there is a story.

Think it through. Who is this person? Why were they looking? What problem did they solve? Every transaction is a solution to somebody’s problem. Understand what problem—need, want, or why-to-buy—you’re solving. Consider this famous quote from marketing expert Theodore Leavitt: “People don’t want to buy a quarter-inch drill, they want a quarter-inch hole.”

“People don’t want to buy a quarter-inch drill, they want a quarter-inch hole.”

Putting your idea into a story doesn’t mean you forget the core. What else you add depends of course on the specific, short-term objective of your business plan. If you’re developing a plan for internal use, the story might be enough if it stands for the right market. But if your plan is for sharing with outsiders, like investors or bankers, then you should add in additional elements that those readers will want.

Of course, this includes the numbers too. With the Lumenostics pitch, by the time we cared, we also wanted to know how many people had the problem Ann was facing. It turns out that about 900,000 cancer survivors get lymphedema annually, and there are about 10 million sufferers in the U.S. Facts matter too, but first you make people care.

When you’re dealing with angel investors, they’re not going to just believe numbers without the story behind them. They want to be able to sense, for themselves, the size of the market.

The solution as a story

The problem is half of the story; the solution is the other half. It’s the shoe that was waiting to drop.

Think of it as not only how your business solves that problem, but why it does, and why your team is uniquely qualified to lead the way. How does your distinctive difference lead to your new solution to this problem?

In the case of the Lumenostics’ pitch above, the solution to Ann’s problem is a wearable device she can buy for $200 plus a subscription for $100. With the way the storytelling flowed, after we understood the problem, we were excited by the relatively low cost and widespread accessibility of the solution. Then we learned that the team included the inventor, and that other founders had backgrounds related to the technology and medical business.

So the solution has to match the problem, but it should demonstrate what’s different about one company when compared to all its competitors. For example, if the problem in a restaurant business plan is based on fine food, then presumably the solution shows how this restaurant’s owners and the team can credibly deliver fine food. If the solution to the problem is software, then it has to include how the team involved is qualified to deliver the right software.

You may have heard of the phrase “the secret sauce,” a metaphor for what’s different and better about this solution. Think about how your team relates to that secret sauce.

I’ve seen pitches in which the solution story includes the story of how the startup founders discovered the problem, and investors will frequently ask founders what piqued their interest in a certain problem. Maybe they’d encountered a software problem as a user; maybe they’d encountered a medical problem because of their own health issues or those of a family member.

A classic example is the founders of a healthy fast food restaurant chain who started the business because one of the two had difficult dietary restrictions because of a health condition. Adding a cause to the mix can be very helpful.

Your business plan should clearly articulate the problem and solution, but by explaining it with a story, you’ll make people care.

Content Author: Tim Berry

Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.