FACTORS AFFECTING THE BUSINESS PERFORMANCE OF MICRO AND SMALL ENTERPRISES IN ADDIS ABEBA TOWN THE CASE OF LIDETA SUB-CITY

Abstract

This study was aimed at factors affecting the business performance of Micro and Small enterprises in Addis Ababa town, the case of Lideta sub city: Ethiopia. The purpose of this study was predict and understand critical factor and helps to encourage establishing or expanding MSEs. The target populations for this study were Manager and owner of Micro and small enterprise. The research design was both qualitative and quantitative research. For the sake of achieving the objectives of this study, different-stage sampling procedures were followed (proportional stratified sampling technique) to select the six types Micro and small enterprises and a total population of the study was three hundred seventy three (373). Out of the total population only one hundred ninety three (193) respondents were sampled using a formula developed by Taro Yamane (1967). The Data was analyzed using descriptive statistics, correlation and Multiple Regression model. Tabulation and pie chart were also used to support the descriptive analysis. To facilitate the data processing and analysis activity SPSS version 20 for windows was used. Based on the Pearson correlation the results of this discovery demonstrated that, the four elements (Technological, Marketing, Finance and Entrepreneur factors) of the MSEs of the study region had a positive and substantial link with business success of MSEs . The multiple regression result suggested that the four variables of performance have positive and significant effect on the performance of the MSEs of the research region as well. Additionally, the output of the study clearly illustrated that as the standardized coefficient β value of 0.674 with P < 0.001 and 0.268 with P < 0.000 revealed that Financial and Marketing factors respectively were the most significant as well as strongest predictors of the performance of the MSEs of the study area as compared to other factors in the study. Finally, the study recommended that, the enterprise should create good customer relationship and handling, creating relationship with organizations that support financially, conducting affordable loan from bank and any institution with fair collateral. More importantly, the respective institutions should devise an alternative means of guarantee for lending money from financial institutions. The micro and small enterprise development office should come up with a business development service reaching wider issues rather than concentrating on trainings.