The Customer Problem in a Business Plan

…the customers problem is this…

The Customer Problem Comes Before the Solution

The starting point for any business plan has to be a customer problem (or need) not the product idea. Customers don’t buy a product, they buy a solution to their problem. Many businesses are based around a product looking for a problem to solve and a market to solve it in. Too much time and effort is spent on the technical details of the product.

Investors don’t think this way, they look at it from the customers point of view, investors look for a solution to a problem, and a big market for that solution.

For example, a business plan which states that the new product is simpler to manufacture than competitor products due to its fewer component parts, is thinking about the product and not the customer. A business plan which says that the new product will reduce breakdowns and maintenance costs for the customer by 40%, is thinking about the customer and the benefit the product can provide them with.

This section of the business plan should focus on the main problem for the customer and not the solution or the product. It should explain what the problem is and how the problem is being solved today. There is no set style, a few paragraphs together with bullet points should be sufficient to indicate what the problem is, why it needs a solution, and how large the potential market for such a solution might be.

This is part of the financial projection model and Contents of a Business Plan Guide a series of posts on what each section of a simple business plan should include. The next post in this series is presenting the solution to the customer problem.

Last modified September 30th, 2019 by Michael Brown

About the Author

Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

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