How Do I Define and Document the Problem My Startup Will Solve?

Clearly identifying the problem you’re trying to solve is a necessary step to enable others to understand the purpose of your startup.

Each successful product you engage with has a purpose: to solve a unique problem or fill a gap. This principle lies at the heart of the birth of all remarkable inventions and startups.

Everything from electricity and the telephone to the Internet, and more recently, giants like Google and Facebook, emerged from a recognition of significant problems and needs.

Here are some examples of problems of famous companies.

CompanyProblem
TeslaTraditional gasoline-powered cars contribute to air pollution and rely on finite resource (fossil fuels).
UberDifficulty in finding reliable rides, especially in areas with limited taxi services.
NetflixLimited access to a wide variety of movies and TV shows, and the inconvenience of physical DVD rentals.

Why Is It Important to Formally Define a Problem?

Clearly defining and documenting the problem your startup will solve helps you better understand the problem and enables you to communicate it more easier to potential partners, employees, investors, and customers.

Before you create your startup, the first step is to pinpoint the problem your startup will solve.

Here’s why it’s so crucial:

  1. Helps you maintain right focus.
  2. Helps you attract the right customers and partners who genuinely need your solution.
  3. Enables you to define your pitch deck and company messaging more precisely.

Now, let’s walk through the process with a healthcare startup example.

Startup Problem Definition

Step 1: Define the Key Problem That Needs to Be Solved

As a startup founder, you need to under the most pain points your potential customers have and craft a solution to solve those problems. Find things that are inconvenient, annoying, time-wasters for them. 

Start by writing a simple problem statement. We recommend the following template:

Given [background or context], the [target audience] is facing [specific problem]. This situation results in [negative effects]. There’s a compelling need to address it to achieve [desired outcome]

Example

Imagine you’re a passionate healthcare entrepreneur, and you’ve noticed a recurring issue.

Startup Problem Statement: In hospitals, doctors are facing significant difficulty accessing all patient medical records when they need them most, all documents are stored in disparate systems.

This situation leads to worst healthcare recommendations and treatment. It also frustrated medical staff and patients, causing wasted time, increased healthcare costs, and reduced healthcare quality.

There’s a need to improve this situation to provide better care, reduce costs, and improve the overall patient experience.

Step 2: Understand the Market

To ensure your solution aligns with market needs we encourage you to conduct some high-level sanity market research. In doing this we try to define the following:

1. Target Audience

Who is primarily affected by the problem?

In this example, it impacts many stakeholders: patients, medical facilities, medical staff, and insurance companies.

2. Market Size Assumption

What is the estimated market size and segment you’re targeting?

For instance, your target market might initially consist of patients age 24-53 who live in Buffalo, New York.

In other examples, it could be more specific to their demographics, how they exercise, how often they go to the doctor for checkups.

3. Assess Current Gap in the Market

What current market needs are unmet?

Current medical facilities do not have integrated electronica health records between facilities. No single solution will currently solve this problem.

Step 3: Document the Problem

Once you understand the problem, try to formalize in a clear format. Below is an example.

Objective & Goals:

DescriptionExample 
ObjectiveWhat do you hope to achieve by addressing this problem/opportunity? Achieve seamless and secure medical record access for patients and healthcare providers.
GoalsSpecific outcomes you aim to achieve.Reduce healthcare record retrieval time by 50% within the first year, increase patient satisfaction scores by 20%, and establish partnerships with 10 healthcare providers.

Importance & Urgency:

DescriptionExample 
RelevanceWhy is solving this problem relevant now?The current electronic healthcare records technology is prime for consolidation this year. A new regulation passed by the government will mandate this as a requirement so we want to get prepared for this.
BenefitsWhat are the potential benefits of solving the problem or seizing the opportunity?The potential benefits include improved patient care, reduced medical errors, enhanced efficiency, and cost savings.
UrgencyHow urgent is it to address this problem/opportunity?It’s urgent to address this problem as the healthcare landscape is rapidly evolving, and patient expectations are higher than ever.  With recent new regulations, this will be required.

Assumptions, Constraints & Dependencies:

DescriptionExample 
AssumptionsList any assumptions made while defining the problem/opportunity.Willingness of healthcare providers to adopt new technology.
ConstraintsList any known limitations or restrictions.Limitations such as budget constraints and data privacy regulations. It will be difficult for healthcare providers to switch platforms.
DependenciesList any dependent factors or conditions that must be considered.Dependencies such partnerships with healthcare facilities and integrations with existing healthcare systems.

Download Free Problem Definition Template

Summary

Properly defining the problem you are trying to solve, is the first step in your startup journey. Being able to clearly communicate this problem to potential investors, employees, partners, and customers is critical to your success.

Remember, the process of defining the problem isn’t a one-time event. As you build your startup, keep listening to your customers, gathering feedback, and adapting to their needs. 

Defining and documenting the problem your startup aims to solve is the compass that will guide you through the ups and downs of your startup journey. 

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