WOLAITA SODO UNIVERSTY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT

FACTOR AFFECTING THE GROWTH AND SURVIVAL OF MICRO

AND SMALL ENTERPRISE CAUSE OF BODITI TOWN

BY: MULUALEM ESHETU

ID.NO: MGT/WE/715/11

ADVISOR: ADDISU T. (Assist. Professor)

A SENIOR ESSAY RESEARCH PAPER SUBMITTED TO COLLEGE OF
BUSINESS AND ECONOMICS, DEPARTMENT OF MANAGEMENT IN
PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR BA DEGREE
IN MANAGEMENT

JUNE, 2022

WOLAITA SODO, ETHIOPIA

 ACKNOWLEDGMENT
First of all thanks to almighty God the source of every knowledge and wisdom: next, I would like to
express my deep gratitude to my advisor Addisu T.(MBA)for his genuine advice, critical comment and
closer supervision. I am also indebted to my friend Mebratu who played a significant role by providing
his personal computer for the study work. Finally yet importantly, I am highly grateful to all persons who
have co operated me in the development and successful completion of this study.

i
 TABLE OF CONTENTS
Contents Page

Acknowledgment..............................................................................................................................i

list of table......................................................................................................................................iv

Abstract............................................................................................................................................v

CHAPTER ONE..............................................................................................................................1

INTRODUCTION...........................................................................................................................1

1.2 Statement of the Problem.......................................................................................................2

1.3. Research question.................................................................................................................3

1.4 Objectives of the Study..........................................................................................................3

1.4.1. General Objective...........................................................................................................3

1.4.2 Specific Objective...........................................................................................................4

1.5. Significance of the Study......................................................................................................4

1.6. Scopes/Delimitation of the Study.........................................................................................4

1.7. Limitation of the Study.........................................................................................................5

1.8 Organization of the Study......................................................................................................5

CHAPTER TWO.............................................................................................................................6

LITERATURE REVIEW................................................................................................................6

2.1.1 The Roles of MSEs..........................................................................................................7

2.1.2 Factors that Influence Growth and Survival of MSEs....................................................8

2.1.3 Lack of Formal or Informal Linkages.............................................................................9

2.2. Empirical Review..................................................................................................................9

CHAPTER THREE.......................................................................................................................11

3. RESEARCH METHODOLOGY..............................................................................................11

3.1. Description of the study area..............................................................................................11

ii
 3.2. Research Design..................................................................................................................11

3.3. Source of Data.....................................................................................................................11

3.4. Target Population...............................................................................................................12

3.5. Sampling Techniques and Sample Size..............................................................................12

3.6. Data Collection Methods....................................................................................................12

3.7. Data analysis.......................................................................................................................12

CHAPTER FOUR.........................................................................................................................14

4. DATA PRESENTATION, ANALYSIS AND INTERPRETATION.......................................14

4.1. Introduction.........................................................................................................................14

4.2 General Information of MSEs in Bodit town.......................................................................14

4.2.1. Forms of MSEs in Bodit town......................................................................................15

4.3. General Characteristics of the Enterprise............................................................................16

4.3.1. Nature of business MSEs engaged in...........................................................................16

4.3.2 The Main Sources of finance at Start-up phase.............................................................17

4.3.3 The Important Aspects for Business Venture Success..................................................19

4.3.4. Respondents attitude on preparation of business plan..................................................19

4.4. Factors affecting the performance of micro and small enterprises.....................................20

4.5. Comparison of Factors........................................................................................................25

CHAPTER FIVE...........................................................................................................................28

5. CONCLUSION AND RECOMMENDATION........................................................................28

5.1. Conclusions.........................................................................................................................28

5.2. Recommendations...............................................................................................................29

References......................................................................................................................................30

APENDIX......................................................................................................................................32

iii
 LIST OF TABLE

Table 1. Background information of respondent’s........................................................................16

Table 2: Politico-legal the factor affecting the growth and survival of MSESs............................20
Table 3: working place the factor affecting the growth and survival of MSEs.............................21
Table 4. Technological the factor affecting the growth and survival of MSESs...........................22
Table 5. Infrastructural the factor affecting the growth and survival of MSESs...........................23
Table 6. marketing the factor affecting the growth and survival of MSESs.................................24
Table 7. Comparison of the major factors.....................................................................................25
Table 8.The current major opportunities of MSESs......................................................................26

iv
 ABSTRACT
The general objective of this study was to assess factors affecting the growth and survival of
MSEs in Boditi town. To investigate effect of infrastructure on the growth and survival of MSEs
in Boditi town. The aim of the study was to assess factors affecting the growth and survival of
MSEs in Boditi town. In order to address the research hypotheses and to achieve the objectives
of this research, a quantitative research approach was adopted and the study followed
descriptive and explanatory research design. In order to, achieve the objective of this study,
relevant data was collect from both primary and secondary sources. The primary sources
include owners and employees of MSEs found in Boditi town and secondary data source was
articles, journals and thesis related to the study. The research was conducted to assess factors
affecting the growth and survival of MSEs in Boditi town. The total population of the study was
200 owners and employees of MSEs that the study focuse on. Therefore, the study using sample
size in this study was 67. To achieve the objective of this study primary data was collect. In order
to collect primary data questionnaire was use. Descriptive statistics the major purpose of
descriptive research is to describe characteristics of objects, people, groups, organizations, or
environments. In other words, descriptive research tries to “paint a picture” of a given situation
by addressing who, what, when, where, and how questions. Descriptive statistics like frequency,
percentage and ratio which includes the means and standard deviation was use to analyze the
demographic characteristics of the respondents and the response variation of the study. The
study shows that micro enterprises have small financial capital and per month average income
from their business operation by expending of less amount of money. Micro Enterprises should
provide on job trainings to capacitate the management MSEs that should be useful for the
efficiency operation of their business in use of resources flows, in decision making, keeping of
records in a good manner and to provide value for all the resources, record keeping by their
qualifications.

v
vi
 CHAPTER ONE
INTRODUCTION
1.1. Background of the Study

Throughout the world, governments have acknowledged the effect of micro and small
enterprises (MSEs) on job creation, improvement of people’s standards of living and hence
an overall impact on the economy (Raj, 2013). Small and medium sized enterprises are an
important ingredient for stable and equitable growth in any national economy. Ethiopia takes
the development and expansion of MSE’s as the main way to solve many of the social
problems.
The recent World Bank review on Small Business activities establishes the commitment of
the World Bank group to the development of the small and medium enterprise (MSE) sector
as a core element in its strategy to foster economic growth, employment and poverty
alleviation (Ayyagari et al.,2003).

In all economies but more in developing and transition economies, there is now a consensus
among state policy makers, development economists as well as international development
partners that small and medium enterprises (MSEs) are a potent driving force for their
industrial growth and indeed, overall economic development. The MSEs play a vital role in
poverty eradicating extreme in the latter. Poverty is cause by inadequate incomes and
incomes result from employment which MSEs are widely known to provide (Adijat, 2012).
According to Tiruneh, (2011), research grown during the last decade indicate that majority of
firms worldwide are dominated by businesses of small and medium enterprises. These
enterprises play a significant role in the economy through innovation and employment
creation. Consequently, the performance of an economy of a nation is closely associated with
the performance of MSEs. In developing countries the informal sector that mainly constitutes
microenterprises is the major source of employment and income for the urban population.
The estimated share of informal employment to the total non-agricultural employment
accounts for nearly half or more in all regions of the developing world and about 72% in sub-
Saharan Africa. There is a broad consensus that a vibrant MSE sector is one that can quickly

1
to changing market situation, generate employment, help diversify economic activities, and
make a significant contribution to exports and trade.

Helal and Jahirul (2011) mentioned that liberalization of the economy along with rapid
globalization has posed severe challenges to MSEs not only in international market but also
in the domestic economy. Since MSEs are based on relatively small investment, their
survival depends on readily available market with easy access. In this context, access to
finance, market development and expansion as well as removal of other bottlenecks are a
challenging task, which requires coordinated efforts by individual business enterprises and
the government.

According to Mulu (2007), the role of micro and small enterprises (MSEs) in income and
employment generation is increasingly recognized, unlike to the previous pessimist notion
that these are not linked to the modern and formal sector and would disappear once industrial
development is achieved. In developing countries the informal sector, in which most of the
MSEs lay, is a large source employment and livelihood of particularly the urban population.

1.2 Statement of the Problem

MSEs have been identified the world over as the stepping stones for industrialization. Robust
economies like the United States of America and the United Kingdom trace their
development from growth and development of their MSEs. Studies by Hatega (2007),
Kauffmann (2005) attest that MSEs cover more than 95% of all firms in Africa and their
importance cannot be overestimated.

Harris and Gibson (2006) examine the common problems of early growth of small business
in Eastern North California and the Finding shows that funds was considered most
significant follow by education, government policy, managerial skill and facilities.
Further Rosli (2011) conducted a study on Determinants of Small and Medium Enterprises
Performance in the Malaysian and the find indicated that micro enterprises are faced with
internal and external constraints to growth, such as excessive competition, lack of access to
finance, vulnerability to crime, lack of market demand, and unrealistically high cost of stock,
administrative corruption, constrictive import / export regulations, uncertainty regarding
business conditions and legal as well as regulatory constraints.

2
On the other hand Zena M. Hassan (2013) investigated the constraints to growth of small and
medium enterprises in Zanzibar and the result of the analysis shows that unfavorable
government regulations and unreliableutility supply (power) significantly hinder MSE
growth.
Another study conducted by Okpara, J.O. (2011) on Factors constraining the growth and
survival of MSEs in Tanzania and the results identified 7 factors that constrain MSEs. These
include problem of power, strict rules on credit, high interest rates on loan , multiple taxation
, absence of tax holiday, trade liberalization and poor patronage of made on goods.
Moreover, Olabisi et al (2011). Conducted a study on factors Affecting Small-Scale
Enterprises Performance Nigeria and the result identified top problem such as access to
finance, government policy inconsistencies and bureaucracy, environmental factors, multiple
taxes and levies, access to modern technology, unfair competition, marketing problems and
non-availability of raw materials locally. Thus managerial problems represent the greatest
problem facing MSEs in Nigeria while non-availability of raw materials locally is the least
problem.
Furthermore, A study by Mugo (2012) investigate factors affecting women enterprises
performance in Kenya and the study identified factors affecting performance of MSEs as,
lack of entrepreneurial training and education, outdated technology, poor access to markets,
mismanagement of resources, and fraud. The study identifies finance as the major
impediment affecting performance of MSEs.

1.3. Research question

A. What is the relationship between factors affecting the growth and survival and
MSEs in Boditi town?
B. What are the effect of finance on the growth and survival of MSEs in Boditi town?
C. What are effect of managerial skill on the growth and survival of MSEs in Boditi town?
D. What are effect of infrastructure on the growth and survival of MSEs in Boditi town?

1.4 Objectives of the Study

1.4.1. General Objective

The general objective of this study was to assess factors affecting the growth and survival of
MSEs in Boditi town.
3
1.4.2 Specific Objective
 To examine the relationship between factors affecting the growth and survival and
MSEs in Boditi town.
 To analyze effect of finance on the growth and survival of MSEs in Boditi town.
 To assess effect of managerial skill on the growth and survival of MSEs in Boditi town
 To investigate effect of infrastructure on the growth and survival of MSEs in Boditi
town.

1.5. Significance of the Study

This research aimed to assesses the factors affecting the growth and survival of MSEs in
Boditi town. Thus, key stakeholders may benefit. The study may help as a source of reference
for those researchers who need to make further study on the area afterward. It may also
contribute for the existing knowledge about the factors affecting the growth and survival
of MSEs and fills the gap of theoretical and empirical evidence in the country. This study
was providing empirical information to the MSEs as well as human resource leaders about the
factors that affecting the growth and survival of MSEs. This may consistently help MSEs
Leaders and concerning bodies in formulating appropriate MSEs Policies, making informed
decisions and adopting strategies that will enhance MSEs growth and survival. This may
benefit the country in job creation and to change the life standard of the societies. The study
provides the researcher the opportunity to gain deep knowledge on the factors influence the
growth and survival of MSEs. It will enhance the practical knowledge of the researcher
through creating a link between the theoretical knowledge and what is going on real life in
the MSEs. Lastly the result of the study will provide insights and information on the factors
affecting the growth and survival of MSEs.

1.6. Scopes/Delimitation of the Study

This study was delimited to the factors that affect the growth and survival of MSE s it was
delimited in identifying the effect of finance, managerial skill and infrastructure. Because of
time and budget constraint the study covered only Boditi town MSEs.

4
1.7. Limitation of the Study
This study helps to recognize the factors affecting the growth and survival of MSEs in
Boditi town in SNNPR regional state of Ethiopia. Therefore, there are limitations on this study
which require further examination and additional research in the future. The limitation of
this study is that, it was carried out only in Boditi town. Hence, this may limit the ability of
the research to generalize the findings for other MSEs. Finally, this study mainly employed
quantitative methods and may thus suffer from the shortcomings of such a method. Possibly
a combination of both quantitative and qualitative methods could provide greater insights and
provide different outcomes.

1.8 Organization of the Study

This study totally contained five chapters. And chapter one of the research give us the
detailed view of the study and organization background, statement of problem, research
questions, objective of the study, significance, limitation and delimitation of the study. It
also contains organization of paper and operational definitions. The next chapter brought
for us the review of related literature. In this chapter the concepts of inventory
management, empirical review of similar studies and conceptual frame work model are
discussed in detail. The third chapter is all about methodology that includes research
design, sample and sampling procedure, data collection analysis method and ethical
consideration. The 4th is about analysis of the study here the primary data collect are
presented, analyzed and interoperated. And the 5th chapter is about the conclusions and
recommendations based on the findings.

5
 CHAPTER TWO
LITERATURE REVIEW
Chapter two reviews literature that is relevant in this research. The chapter also explores and
gives more meaning to the theoretical foundations as well as empirical issues underpinning
the phenomena being studied. Specifically, it is organized under three main sub-topics;
theoretical review of MSEs, empirical review and conceptual frame work of the study.
2.1. Theoretical Review of MSEs

Micro and small enterprises have a diverse definitions and unresolved debates on it. Policy
makers, researchers, and others involved in the promotion and development of small business
use different terms such as micro enterprises, informal sector, small business, small
enterprises, small scale industries, small and medium sized enterprises. Generally, there is no
universally agreed definition of micro and small enterprises. Due to this, countries adopt their
own working definition. The lack of consistent definition has led to confusion and failure to
distinguish among different segments and has significant implications on the structure of
interventions and promotional supports that could be provided to a certain specific segment
of the sector. However, in any country clear and agreed national definitions are needed for
focusing discussions on the sector, for research purposes and most importantly for facilitating
appropriately tailored supports and assistances to the sector. (Hrity,2009).

Martin (2006) stated that definitions of micro and Small Enterprises (MSEs) vary from
country to country, depending on Size of employment, capital investment or turnover is use
as criteria to categorize enterprises along scales of operation and define micro, small,
medium and large enterprises. This categorization is important for functional and
promotional purposes to achieve the desired levels of development. Different writers have
usually given different definitions to MSEs. Those definitions are: by size, terms of their
legal status and method of production.

According to Minilek and Chinnan (2012), there are different ways of defining the term
small and micro enterprises in different countries. So, according to European Union, small
enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual
turnover and/or annual balance sheet total does not exceed EURO 10 million.

6
A micro enterprise is defined as an enterprise which employs fewer than 10 persons and
whose annual turnover and/or annual balance sheet total does not exceed EURO 2 million.

2.1.1 The Roles of MSEs

According to fadahunsi (2012), the role of micro and small enterprises (MSEs) in the
development process continues to be in the forefront of policy debates in developing
countries. The advantages claimed for MSEs are various, including: the encouragement of
entrepreneurship; the greater likelihood that MSEs will utilize labor intensive technologies
and thus have an immediate impact on employment generation; they can usually be
established rapidly and put into operation to produce quick returns; MSEs development can
encourage the process of both inter- and intra-regional decentralization; and, they may well
become a countervailing force against the economic power of larger enterprises.
More generally the development of MSEs is seen as accelerating the achievement of wider
economic and socio-economic objectives, including poverty alleviation.

Micro, small and medium enterprises play key role in the economic wellbeing of developing
countries. They have been identified to play key roles in a society including contributing to
jobs through innovations and creativity as well as aiding human resources development. The
immediate and the long run effect is that they affect levels of income and ultimately
contributing to poverty alleviation (Agyapong, 2010).

Similarly, Entrepreneurship plays an important role in the economic growth and development
nation. It is a base for initiation, promotion and distribution of wealth and service of an
entrepreneur. An entrepreneur is a critical factor in economic development and integral part
of the socio –economic transformation and development. MSEs together with large
enterprises, they play a key role in mobilizing public and private resources and allocating
them to productive activities. They provide the main driving force with trade, investment and
technology, on which the strength and dynamism of the economy depends. Over all, MSEs
development can contribute to any of national and regional economic development,
promoting employment particularly in creating new jobs, alleviating poverty and assisting
those who are disadvantaged, facilitating the transition to a market economy, promoting
equity and addressing uneven development democracy (Sadik, 2009).

7
2.1.2 Factors that Influence Growth and Survival of MSEs
Hrity (2009) revealed that most MSEs face critical constraints both at the operation and start
up level. As various studies identified some of these constraints include lack of access to
finance, lack of infrastructure, lack of training in entrepreneurial and management skills, lack
of information on business opportunities, social and cultural facts, in particular deficient
entrepreneurial culture and excessive corruption and also associated with demand problems,
paucity/scarcity of capital, equipment and technology, human and material inputs. Lack of access
to capital and credit.

Mulugeta, (2010) reveled that Lack of adequate investment capital, lack of sufficient loan,
and inefficient financial market in terms of facilitating financial resources to entrepreneurs
are the major obstacles in doing business, particularly in the informal sector. Most micro and
small enterprises are highly risky ventures involving excessive administrative costs and lack
the experience in dealing with financial institutions and do not have a track record of credit
worthiness with banks. As a result of absence in financing, the creation of new enterprises
and the growth and survival of existing ones was impeded. Access to finance is a major
bottleneck for the rapid growth and development of MSEs mainly due to targeted mechanism
put in place to address the financial needs of MSEs. More of MSEs are don’t have access to
micro finance institutions and bank credit due to they have a lack of acceptable collateral. So,
access to finance is a key issue for MSEs special for new starting business Market constraints
According to Andualem (2010), MSEs in Ethiopia, usually market constraints and the
inability to sell their products and services are listed as one of the most serious obstacles to
the starting of business and growth beyond mere subsistence level. The report shows that
31,863 small scale manufacturing industries all over the country, of which 19,996(62.75%)
are located in urban and the remaining was in rural areas, showed that 48% of the total
establishments have faced a problem of demand or access to market. This demand problem
has prevailed because of existence of weak or absence of inter linkage mechanisms with
other medium or large enterprises and existence of weak or absence of appropriate
marketing channels, open markets, exhibitions, trade fairs, displays centers etc. which MSEs
would have use to market their outputs.

8
2.1.3 Lack of Formal or Informal Linkages
Hayru (2013) stated that there are other factors that hinder growth and expansion of MSEs is
the effectiveness with which they interact with large or similar firms. In other words, formal
and informal linkages or business cooperation through networking are not common. Large
public enterprises and the few foreign affiliates do not outsource some of their operations to
local MSEs. The legal and institutional mechanisms to enforce contractual obligations and
government policy to design appropriate incentive mechanism to encourage the expansion of
business linkages/sub-contracting managements is at its infant stage.
Furthermore, Sreevidya (2011) identified six more important problems faced by MSEs as
follows:
1) Lack of proper machinery and equipment: Many MSEs use inefficient and
outdated machinery and equipment. This affects the quality of production.
2) Lack of technical know-how: Do not have the knowledge about different alternative
technologies
and processes available for manufacturing their products to improve the quality of products
and reduce costs.
3) Run on traditional lines: They have not yet adopted modern methods
and techniques of production. They have not taken adequate interest in research and
development efforts. Hence they cannot be run efficiently.
4) Irregular supply of raw materials: The majority of MSEs depend on local sources for their
raw material requirements. Small entrepreneurs are forced to pay high prices for materials
because they purchase materials in small quantity.
5) Personnel problems: it is difficult for them to get qualified persons to run the business. They
cannot provide much training facilities to employees. 6) Lack of clear-cut policy of the
government: The government may take decisions relating to MSEs on the basis of political
consideration rather than on economic consideration.

2.2. Empirical Review

Fatai (2011) posits that, small and medium scale enterprises in Nigeria have performed at
very abysmal level when compared with other countries. This low performance has further
exacerbated poverty, hunger unemployment and low standard of living of people in a country
whose economics is ailing and suggests that the federal government should enhance the
9
capacity of its SMEs in order to achieve her millennium development goals by 2015. Fatai
added financial constraints, lack of infrastructural facilities, government unfavorable fiscal
and monetary policy inconsistencies, and internal characteristics are challenges of SMEs.
Onugu (2005) conclude that some of the challenges of the SMEs are induced by the
operating environment such as (government policy, globalization effects, and financial
institutions) others are functions of the nature and character of SMEs themselves.
Guzman and Santos (2001) developed a conceptual model showing that socioeconomic and
institutional factors, such as macroeconomic policies, in an entrepreneur’s external
environment, and personal characteristics of the entrepreneur, directly constrain enterprise
success and economic development.

According to Mint berg (1989), barriers to SMME survival and growth are likely to be faced
in all four functional areas of business operation management, marketing, operations and
finance and may be directly related to the size and start up conditions of an SMME. This
implies that analysis of constraints to enterprise success and economic development must
also consider firm level barriers.
According to Amyx (2005), one of the most significant challenges is the negative perception
towards SMEs. Potential clients perceive small businesses as lacking the ability to provide
quality services and are unable to satisfy more than one critical project simultaneously. Often
larger companies are selected and given business for their clout in the industry and name
recognition alone.
Mbogo, (2011), identified in that Lack of planning, improper financing and poor
management has been cited as the main causes of failure of small enterprises. Regardless of
the high failure rate by SMEs in Kenya, their enormous contribution to the entire economy
cannot be overlooked.
Most studies (Ngobo, 1995; Desalegn and Kebirom, 1997; Chijoriga and Cassiman, 1997),
point to finance as one of the key constraints to small enterprise growth. This is worsened by
the absence of financial markets in the developing countries. Small enterprise owners cannot
easily access finance to expand business and they are usually faced with problems of
collateral, feasibility studies and the unexplained bank charges. This means that they cannot
access finance to enable them to grow.

10
 CHAPTER THREE
3. RESEARCH METHODOLOGY
3.1. Description of the study area
Boditi town was locating the southern part of wolaita zone. The town has four Keble's. The
topography of the town is made up of a chain of mountain, hail, and cliff and also the town is
suitable for industry because the weather condition is favorable for the industries.
Geographically it locate from the latitude of 10°17'N-10°49'N and longitudinally
37°00E_37°11E

3.2. Research Design

The aim of the study was to assess factors affecting the growth and survival of MSEs in
Boditi town. In order to address the research hypotheses and to achieve the objectives of this
research, a quantitative research approach was adopted and the study followed descriptive
and explanatory research design. The major purpose of descriptive research is to describe the
state of affairs, as it exists at present or it helps to describe the characteristics of a
phenomenon. According to Zikmund et al. (2010), the major purpose of descriptive research
is to describe characteristics of objects, people, groups, organizations, or environments. And
Explanatory design use to determine and explain the relationship and effect between the
independent variables and dependent variable. According to Saunders, Biber and nagy
(2010), explanatory research is about studying a situation or a problem in order to explain the
relationships between variables.

3.3. Source of Data

In order to, achieve the objective of this study, relevant data was collect from both
primary and secondary sources. The primary sources include owners and employees of MSEs
found in Boditi town and secondary data source was articles, journals and thesis related to
the study. So as to develop conceptual frame work the researcher use secondary data
sources.

11
3.4. Target Population

The research was conducted to assess factors affecting the growth and survival of MSEs in
Boditi town. The total population of the study was 200 owners and employees of MSEs that
the study focuse on.

3.5. Sampling Techniques and Sample Size

The research was conducted to assess factors affecting the growth and survival of MSEs in
Boditi town. The total population of the study was 200 owners and employees of MSEs that
the study focuse on. The researcher use the sample size determination table developed by
Israel, (2013), the appropriate sample size for population of N=200 population n=67 and
confidence level is = 0.1. Proportionate stratified random sampling technique use in order
to give proportional representation to all MSEs, which form the sampling frame of the study.
The strata for this research consist of three (3) MSEs sectors. According to Zikmund et al.
(2010), stratified sampling reduces random sampling errors, groups adequately represented
when strata are combined and sample ensures that the sample accurately reflect the
population. The total sample size is shown using Yamane formula in (1967).

N
n= 2 where, n= sample size, N= total population and e= errors of significance
1+ N (e)

200
n= 2 = 67
1+ 200(0.1)

Therefore, the study using sample size in this study was 67

3.6. Data Collection Methods

To achieve the objective of this study primary data was collect. In order to collect primary
data questionnaire was use. Since the approach of the research was quantitative, the data
use was collect through structured close ended and open ended questionnaire and rated
on a likert scale of 1 (strongly disagree) to 5 (strongly agree). Questionnaire is simple and
quick to administer and it helps to collect data from the respondents (Zikmund et al., 2010).

12
3.7. Data analysis
Descriptive statistics the major purpose of descriptive research is to describe characteristics
of objects, people, groups, organizations, or environments. In other words, descriptive
research tries to “paint a picture” of a given situation by addressing who, what, when, where,
and how questions. Descriptive statistics like frequency, percentage and ratio which includes
the means and standard deviation was use to analyze the demographic characteristics of the
respondents and the response variation of the study (Zimund et al., 2010).

13
 CHAPTER FOUR

4. DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1. Introduction
The purpose of this study is to critically assess the factor affecting the growth and survival of
MSESs Bodit town.

These chapters deals with the presentation analysis and the interpretation of data collected
through questionnaires and secondary data from SMES of Bodit town concerning the role of
compensation and benefit on employee performance were selected employees was 67 in this
study. From the total employee of the bank questionnaire were distributed for 60 employees and
out this 7 was returned this misused return is because of carelessness of the respondents but the
researcher attempt to collect them.

4.2 General Information of MSEs in Bodit town.

Currently, there around 200 MSESs operated in Bodit town. These enterprises are concentrated
on 9 kebeles. But the manner of concentration and distribution of these enterprises is very
uneven. Most of these enterprises are engaged in 3 main sectors namely; manufacturing,
construction, and service giving enterprises.

2%
6%
6%
9% 22%

13%

15%
10%
16%
Key

Kebele 01-2%

Kebele 02-22%

Kebele 03-15%

14
Kebele 04-16%

Kebele 05-10%

Kebele 06-13%

Kebele 07-9%

Kebele 08-6%

Kebele 09-6%Source – Bodit town enterprise document (2022)

This shows that the distribution of enterprises in each kebele of the city is not uniform. As shown
on the figure above; the percentage of enterprises which are currently operated in kebele 02, 03,
and 04 constitute around 22℅, 15℅ and 16℅ respectively. This is due to the availability of raw
materials and place for operation is better in these enterprises than others.

4.2.1. Forms of MSEs in S Bodit town

Cooperate business

Private business

5%
Partnership business

53%
42%

Source, Bodit town enterprise document 2022.

As it is depicted on the diagram, the ownership and form of micro and small business enterprises
in Bodit town are mainly classified in to three; namely, private business, partnership, and co-
operative form of business enterprises. Of these, the largest form of business in which MSESs
engaged in the city is co-operative form of business (53%), followed by private (42%) and
partnership (5%) form of business respectively. The total MSEs of co-operative, private and

15
partnership forms of business enterprises which are found particularly in 02 and 03 kebeles are
around 99, 61 and 10 respectively (Bodit town enterprise document 2006) .

Table 1. Background information of respondent’s

Item Manufacturing construction Service Total

Sex No- of %- No- of %- No- of %- No- of %-

age
Respondent respondent age Respondent Age Respondent age

Male 17 71% 14 72% 3 29% 34 63%

Female 7 29% 5 28% 9 71% 21 37%

Source: questionnaire own, 2022

As shown in table-1 above, from the total MSEs of respondents, 63% were males and 37%
constitute females. This shows that the total MSEs of females engaged in entrepreneurial
activities is lower than males. In addition to this the engagement of males and females in MSESs
is vary in each category of business activity. Females are highly engaged on service enterprise;
on the other hand, males are dominant in manufacturing and construction types of businesses.

But what should be noted here is that, the involvement of females now a day becomes
prospective. Because according to a research conducted by Daniel (2010, in Jimma University)
states that from the total of MSESs operated in Bodit town, only 17% females were participated.
But currently the involvement of females in entrepreneurial activities becomes increase when it
is compared to the past.

4.3. General Characteristics of the Enterprise

4.3.1. Nature of business MSEs engaged in

Most of the enterprises in Bodit town are engaged in three main sectors, mainly; manufacturing,
construction and service enterprises.

key

16
 Manufacturing

Construction
31%
Service
47%

22% Figure 1: source of business

As it is depicted on the figure, majority of enterprises in the city are engaged in three main
activities. From these the manufacturing sector is the dominant area of operation for most
enterprises followed by construction and service enterprises with their respective percentage
values of 47%, 31% and 22% . This division of MSEs by sector type was believed to be helpful
to study each sector critical thefactor affecting the growth and survival ofMSEs. This is because
firms in different sectors of the economy face different types of problems. That means the degree
of those critical factors in manufacturing sector may differ from the factors that are critical to
construction and service sectors.

4.3.2 The Main Sources of finance at Start-up phase

Starting own business requires a starting capital rather than mere existence of ideas. To capture
information regarding the relative importance of the various sources of finance, enterprises were
asked whether they ever received credit from each of a given list of sources of finance. The
following figure shows the main sources funds.

6%
13%
39%
18%

24%

17
Figure 2: Sources of finance

As can be seen from the figure personal savings (39%) are the most frequently used sources,
followed by micro finance institutions (24%), family, friends/relatives(18%), iqub/idir (13%) and
banks (6%) %) in that order. This shows that the main source of finance for MSESsin kebele
02 and 03 is personal saving followed by micro finance institutions. But also other traditional
source like iqub/idir, family and friends/relatives plays the greatest role.

Besides, the result of interview shows that majority of MSEs in the study area uses informal and
semi-formal financial sources. The formal financial institutions, particularly banks have not been
able to meet the credit needs of the MSEs. According to majority interviewee, the reason for
emphasizing on informal sector is that the requirement of collateral/guarantor is relatively rare
since such sources usually take place among parties with intimate knowledge and trust of each
other. But the supply of credit from the informal institutions is often so limited to meet the credit
needs of the MSEs. To wind up, such constraint of finance for MSE affects their performance
directly or indirectly.

4.3.3 The Important Aspects for Business Venture Success

15% Business plan

36%
21% Entrepreneurial team

Business opportunities
28%

Training in business

Figure 3: source of business venture success

18
As it can be seen from the figure above, 36% of the respondents indicated that a business plan is
important for the success of their business ventures, 28% of the respondents felt that an
entrepreneurial team is essential for the success of their business ventures, 21% of respondents
respond that the availability of business opportunities is important for the success of their
business ventures, and 15% of the respondents concluded that training in business skills is
important for the success of their business ventures. The closer analysis of the result leads to the
conclusion that a business plan is the most important aspects for the success of any business
venture. According to Renee (2007 as cited in Admasu 2012), sound business plan may make a
difference between a business that succeeds and a business that fails. Approximately 90% of
small businesses fail before two years, according to the Small Business Association. And even
after that two year mark has been passed, there are no guarantees. This is mainly due to lack of
business plan knowledge and the absence of a business plan.

4.3.4. Respondents attitude on preparation of business plan

32%
41% Prepare business plan

Didn't prepare business plan

27% On the way of preparing it

Figure 4: source of business plan

As it is indicated on the pie chart, 41 respondents stated that they have their own business plan
while starting their business. According to the interview result, those who have business plan
enable them to be more profitable and competitive. More over; they states that their business
plan is a selling plan by developing the opportunity, determining the resources required,
obtaining those resources, and successfully managing the resulting venture. From the total
respondents, 27% of them have no business plan but they are trying to prepare it for future
operation. Currently these individuals are taking some courses at Sabian, Ethio- Italy technique
and vocational school particularly regarding to preparation of business plan. The remaining
respondents of the study i.e. 32% of them have no business plan. Because most of them have a
knowledge gap on the importance of business plan and they always resist while they are enforced

19
to prepare it. Based on the interview result, the basic reason that those enterprises do not prepare
business plan is because they are misunderstood on the importance of business plan. They feel
that if they prepare the business plan their business secrecy becoming disclosed and they fear
that others will copy it and their sustainability in the market will wind up.

4.4. Factors affecting the performance of micro and small enterprises

Respondents were asked different questions regarding the factors affecting the performance of
MSESs in 02 and 03 sub-kebeles. Their responses are organized in the following manner.

Table 2: Politico-legal the factor affecting the growth and survival of MSESs

Item Manufacturing Construction Service

1.politico-legal factors No - of %- No - of %- No - of %-
Respondent age Respondent age Respondent Age
Tax levied on my
business isn’t fair and
fair 3.44 68% 3.57 71% 3.25 65%
Bureaucracy in
company registration
and licensing
3.66 73% 3.71 74% 3.75 76%
Luck of government
support 3.77 75% 2.57 51% 3.50 70%
Source: questionnaire own, 2022

As it is indicated in table above, the average frequency of response and percentage of response
for the politico-legal factors were calculated and it resulted different values. The table shows
inadequacy of government support has an average frequency response of 3.77 with a percentage
of 75% for manufacturing sector, bureaucracy in company registration and license has an
average frequency and percentage of response of 3.71 and 74% respectively for construction
sector and 3.75 and 76% respectively for service sector Therefore, it may be concluded that
bureaucracy in company registration is the main factor that affects the performance MSESs

20
engaged in construction and service sectors. On the other hand, luck of government support is
the major factor that affects the performance of MSEs particularly in manufacturing sector.

According to the table 4.4.1 above, enterprises engaged in manufacturing, construction and
service sector, the tax levied on their business is not reasonable. So this factor moderately affects
MSESs performance because the percentage of response is above 50%.

Table 3: working place the factor affecting the growth and survival of MSEs

Item Manufacturing Construction Service

Working place factors Average %- Average %- Average %-
frequency of Age frequency age frequency of age
responses of response responses
2.1. Absence of own
premise 4.33 86% 3.14 62% 3.5 70%
2.2. Inconvenient of
current working place 3.44 68% 3.42 69% 4.0 80%
2.3.The rent of house is
very high 1.22 24% 2.42 48% 2.5 50%
Source: questionnaire own, 2022

The average frequency and percentage of response in table above shows, the premises factors
that hinders the performance of MSESs particularly in the manufacturing sector is absence of
their own premise. But in construction and service sectors, the inconveniency of current working
place is the main factor that affects the performance MSESs followed by the absence of place for
working. With regard to rent of house, the average frequency and percentage of response is
lower than 50%. This shows that the expensiveness of rent of the house is not as such an
important factor that can hinder the performance of MSESs in the all the above three sectors.

What should be noted here is that the intensity of influence of the above factors is not similar for
all sectors. The degree of affection varies from one particular sector to another. Absence of their
own working premise and inconveniency of current working place are the most critical factors
that negatively affect the performance of manufacturing and construction sector respectively.

21
 Table 4. Technological the factor affecting the growth and survival of MSESs

Item Manufacturing Construction Service

Technological factors Average %- Average %- Average %-
frequency age frequency age frequency age
of of of
responses responses responses
Lack of appropriate machinery
and equipment 4.55 91% 3.25 65% 3.75 75%
Lack of skills to handle
new technology 3.88 77% 4.00 80% 4.00 80%
Lack of money to acquire
new technology 4.33 86% 3.71 74% 3.50 70%
Source: questionnaire own, 2022

As it can be seen in table above, lack of appropriate machinery and equipment is the main
problem of MSESs engaged in manufacturing sector. The average frequency and percentage of
response for this sector are 4.55 and 91% respectively. This is followed by lack of money to
acquire new technology which has an average frequency and percentage of response of 4.33 and
86% respectively.

According to table 4 for operators engaged in construction and service business, lack of skill to
handle new technology is the main factor that affects their performance in similar manner. That
is an average frequency of 4.00 and percentage of response of 80% respectively for both. With
regard to lack of appropriate machinery and equipment, the average frequency of response are
3.25 and 3.75 with percentage of response of 65% and 75% for operators engaged in
construction and service respectively.

Table 5. Infrastructural the factor affecting the growth and survival of MSESs

Item Manufacturing Construction Service

Infrastructural factors Average %- Average %- Average %-
frequency age frequency age frequency of age
of of

22
 responses responses responses
Power interruptions
4.77 95% 4.42 88% 4.65 93%
Insufficient &interrupted
water supply 3.77 75% 4.14 82% 4.42 88%
Lack of sufficient and
quick 3.85 78% 3.85 77% 4.25 85%
transportation service
Source: questionnaire own, 2022

The result presented in table 5 shows that power interruption is the most series problem that
hinders the business performance of all the above mentioned sectors. The average frequencies of
response of power interruption are 4.77, 4.42 and 4.65 with percentage of response of95%, 88%
and 93%for manufacturing, construction and service sectors respectively. The average frequency
of response for lack of sufficient and quick transportation service are 3.85, 3.85 and 4.25 with
percentage of response of78%, 77% and 85% for manufacturing, construction and service sectors
respectively. This shows that lack of sufficient and quick transportation service is another
constraint that hinder the performance of MSESs specifically the above three sectors.

Concerning transport facilities, access to affordable and appropriate public transport is of

paramount vitality in expanding the employment opportunities of the urban poor who need
inexpensive access to areas of economic and commercial activity. Equally, the importance of
physical capital especially infrastructure in enabling people to access, and directly support,
income-generating activities is well recognized by writers on urban livelihoods such as
Rakodi(2002:22). Housing which is close to employment opportunities or markets will improve
residents’ access to income-generating work and will reduce transport costs, which can be a
significant expenditure and time-drain for the urban poor (Farrington et al., 2002:57).

Table 6.Marketing the factor affecting the growth and survival of MSESs

Item Manufacturing construction Service

Marketing factors Average %- Average %- Average %-
frequency age frequency age frequency age

23
 of responses of responses of
responses
Inadequate market
for my product. 3.77 75% 3.85 77% 3.50 70%
Searching new market
is so difficult. 3.55 71% 3.71 74% 3.25 65%
Absence of relationship
with an organization that
Conduct marketing
research. 3.11 62% 3.42 68% 2.72 54%
Poor customer relationship
And handling. 2.22 44% 2.45 49% 2.55 51%
Source: questionnaire own, 2022

As shown in the table above, marketing factor is consisted of four items. From these factors
inadequacy of market and difficulty of searching new market are critical the factor affecting the
growth and survival ofMSESs engaged in all sectors. The average frequency and percentage of
response clearly show respondents agreement on the variables. That is average frequency
response of market inadequacy are 3.77, 3.85 and 3.5 with percentage of response of 75%, 77%
and 70% for MSESs engaged in manufacturing, construction and service sector respectively. The
respondents of manufacturing, construction and service sectors with an average frequency of
response of 3.55, 3.71 and 3.25 with percentage of responses of 71%, 74% and 65% shows that
there is difficulty of searching new market respectively.

In table 4.5 it can be seen that, absence of relationship with an organization that conduct
marketing research is another marketing factor that affect the performance of MSESs. The
average frequency of response of 3.11, 3.42 and 2.72 with percentage of response of 62%, 68%
and 54% for MSESs engaged in manufacturing, construction and service sector enterprises
respectively.

On the other hand, the table above shows that respondents of all sectors are neither ‘agreed’ nor
‘disagreed’ with poor customer relationship and handling that affect their performance with

24
average frequency of response of 2.22, 2.45 and 2.55 with percentage of response of 44%, 49%
and 51% for respondents engaged in manufacturing, construction and service sector respectively.

4.5. Comparison of Factors

Even though, all the politico-legal, infrastructure, working premises, technology, marketing,
financial, management and entrepreneurial factors affect the performance of MSESs, this does
not necessarily mean that all factors have equal impact. The following table clearly compares the
overall impact of all key factors discussed in detail above.

Table 7. Comparison of the major factors

Item Manufacturing Construction Service

Rank of Severity Average %- Average %- Average %-
frequency age frequency age frequency of age
of of responses
responses responses
1. Politico-legal factors 3.14 63% 3.23 64% 3.33 66%
2.Working premises 4.04 80% 3.85 77% 3.68 74%
factors
3. Technological factors 3.22 64% 2.94 59% 3.03 60%
4. Infrastructural factors 4.23 84% 4.28 85% 4.03 80%
5. Marketing factors 3.51 70% 3.67 73% 3.22 64%
6. Financial factors 4.46 89% 4.54 90% 3.95 79%
7. Management factors 3.55 71% 3.14 62% 3.01 60%
8.Entrepreneurial factors 4.14 83% 3.42 76% 3.51 70%
Source: questionnaire own, 2022

As it can be seen from the above summarized table, that financial and infrastructural factor has
the biggest potential to contribute to the performance, followed by working premise,
entrepreneurial, marketing, management, politico-legal, and technological factors. In other
words, the result shows that financial and infrastructural factors are the two topmost Thefactor
affecting the growth and survival of MSE in the selected area. This result is supported by Haftu
et al. (2009 as cited in Admassu, 2012) who found that lack of finance and working space rank

25
on top being reported as the major constraints by a large proportion of the enterprises. It can,
therefore; be concluded that finance and infrastructural factors do largely affect the performance
of MSESs which are engaged in manufacturing, construction and service sectors.

Table 8.The current major opportunities of MSESs

Item Manufacturing Construction Service

Available opportunities Average %- Average %- Average %-
frequency of age frequency of age frequency of age
responses responses responses
Growing MSEs of
credit institutions 4.33 86% 4.28 85% 4.12 82%
Supply of technological
Inputs 2.45 49% 2.55 51% 2.38 47%
Supply of working 4.14 83% 3.42 66% 3.51 70%
place
Availability of supply
chain of inputs 3.14 63% 3.23 64% 3.33 66%
marketing relationship 3.32 65% 3.61 71% 3.48 68%

Source: questionnaire own, 2022

Among the current available opportunities that are accessible to operators of MSESs, the
growing MSEs of credit institution, scores the highest average frequency of response of 4.33,
4.28 and 4.12 with percentage of response of 86%, 85% and 82% for operators which are
engaged in manufacturing, construction and service sectors respectively.

The second most important opportunity that is currently available to MSESs is supply of working
place. Their average frequency of responses are 4.14, 3.42 and 3.51 with percentage of response
of 83%, 76% and 70% for MSESs engaged in manufacturing, construction and service sectors
respectively. This shows that the operators of all sectors agreed with that they have an
opportunity of supply of place for work which is available to all sectors that are engaged in three
sub sectors.

26
According to interview conducted with operator it was confirmed that, currently, particularly in
relation to availability credit financial institutions such as Dire MFI encourage them to take loan
for starting their business or for their working capital need. This is an indicator of the growing
MSEs of credit institution

CHAPTER FIVE

5. CONCLUSION AND RECOMMENDATION

5.1. Conclusions
The researcher conducted an investigation on the factors that affecting the operational efficiency
of micro enterprises in Zuriyaworeda. The study shows that most of micro enterprises are males
which accounted 63% and the remaining 37% was female. The data showed that about 69% of
micro enterprises management MSEs or employees had educated and remaining has no any
education background. 91% of micro enterprises management MSEs and employees are between
ages of 18-35 which shows a productive age and remaining was fallen between ages of 36-60.

27
Most of the enterprises have working experiences in participation of selected sectors such as
urban agriculture, manufacturing, trade, services and construction.

The study shows that micro enterprises have small financial capital and per month average
income from their business operation by expending of less amount of money. Some of the micro
enterprises have their own working place and others got from rent renders such as from
municipality and Kebele. According to this study conducted, the operational efficiency of micro
enterprises was affected by managerial education scored as the very important factor accounted
18.5% followed by controlling at 17%. Management and employees working both experiences
and leading was ranked third at 16.5%, planning was ranked fourth at 16% and finally organizing
at 15.5%. According to simple factors relation computation, the result showed that all factors
were contributed 80% to operation efficiency of micro enterprises. Through used OLS model the
study showed that 83.17% (Adjusted R-square) was affected by factors such as controlling,
leadership, organizing, planning and experiences of the managements. This shows that the
management factors were significantly affecting the operational efficiency of the micro
enterprises. And it also showed that a further 16.83% of the operational efficiency is affected by
other factors not seen or considered by this study. This means that the factors are highly affects
the operational efficiency and it needs to focus on factors to make micro business enterprises
more operationally efficient because micro enterprises are the base for emerging of other level
enterprises such as small, medium and large enterprises.

5.2. Recommendations
 Micro enterprises are the base for the emerging of other enterprise such as small, medium
and large enterprises. Therefore, micro enterprises should put management factors in
place that help in achieving of the operational efficiency of their business.
 They should take responsibilities of establishing and maintaining of appropriate
management factors for effective and efficient operation of their business which
compliance with applicable laws and regulation of the Country.
 Micro Enterprises should provide on job trainings to capacitate the management
MSEsthat should be useful for the efficiency operation of their business in use of
resources flows, in decision making, keeping of records in a good manner and to provide
value for all the resources, record keeping by their qualifications.

28
  Government must provide a good environment for the operator in education provision to
make them more efficient in their business operation.
 Micro enterprises managers should try to have management experiences to become more
efficient in contributing to increase their profits through fulfilling of customers demands,
minimizing of wastages, well known the trends of market from their past experiences in
making good decision.
 Most of the micro enterprises have no well-developed business plans and they are not
effective and efficient in their business. Without plan, it is impossible to get visible profit,
so they should create a good for their business profit feasibility. They should develop a
good business plan. They would approach experienced managers and experts from the
relevant government sectors to help and advise them in putting up together a business
plan before they get into operation of their business.
 Micro enterprises had better create an organizational structure that shows a clear direction
for the duties and responsibilities of their staff and lead and control all the resources of
their business to be more efficient.
 To make micro enterprises competitive and profitable, enhancing the capacity and skill of
the management through continuous trainings, experiences sharing from successful
enterprises and provision of business advices and consultancy are highly required.
 It is also important to improve the educational status, experiences of the operators to
increase the operational efficiency of the micro business enterprises.

REFERENCES
Adijat, M.(2012). Arabian Journal of Business and Management Review:Impact of Small
and Medium Scale Enterprises in the Generation of Employment in Lagos State,
Vol. 1, No.11.

Admasu, A. (2012).Factors Affecting the Performance of Micro and Small Enterprises in

AradaandLidetaSub-Cities.Unpublished MBA thesis. Addis Ababa University,
Ethiopia.

Baumback and Lawyer, (2010) .(1997) A study on Financial Sources of Micro and
Small Enterprises in deban . Unpublished MBA Thesis, South Africa.

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Chant, E. and lightelm, D. (2003). Small Business Demand for Trade Credit: In Applied
Economics, Vol. 20.
Carver, P., Sonia, S., &Nicolene, B.(2013).The role of micro and small enterprises in
poverty eradication interns. Alternation Special Edition, 8 (86) /106.

Fadahunsi, A.( 2012). The Growth of Small Businesses: American Journal of Economics
and Business Administration 4 (1): 105-115, 2012 ; ISSN 1945-5488 . United
Stated of America.

Fafchamps, Daniels, L. and Fisseha, Y. (2006) ‘Micro and Small-scale Enterprises in

Botswana: Results of anation-wide Survey’ Gemini Technical Report. (Ministry
of Finance and Development Planning, Gaborone)

Guzman and Santos (2001). Small Enterprises and Challenging Policies: Structural
Adjustment, Financial Policy and Assistance Programmes in Africa. Intermediate
Technology Publications, London.

Habtamu, T., Aregawi, G. and Nigus, A. (2013). Growth Determinants of Micro and
Small Enterprises: Evidence from Northern Ethiopia. Journal of Economics and
Sustainable Development: ISSN 2222-1700//ISSN 2222-2855; Vol.4, No.9,
Mekelle University, Ethiopia.

Mbogo, (2011). What Small Business Entrepreneurs Expect From Local Credit Agencies
and International Business Facilitators”. Paper presented at “Business America”.
A Forum organized by the US Commercial Consulate, Nairobi, kenya, March 3,
pp. 1 – 10.

Martin,V.(2006).Managing projects in human resources, training and development. Study

material ISBN 0 7494 4479 7, Great Britain and the United States.

Ngobo, 1995.A Market-Oriented Strategy for Small and Medium-Scale Enterprises.

Discussion Paper No. 48, International Finance Corporation.

Okpara, J.O. (2011). Factors constraining the growth and survival of SMEs in Tanzania:
implications for poverty alleviation. Management Research Review.

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Olabisi, S.Y., Olagbemi, A.A. &Atere, A.A. (2011). Factors Affecting Small-Scale
Enterprises Performance In Informal Economy In Lagos State Nigeria, Africa
Journal of Enterprises

Onugu, B.A.N (2005). Small and Medium Enterprises in Nigeria: Problems and
Prospects. St Clements University Website

APENDIX
WOLAITA SODO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT

SECTION 1: INTRODUCTION

Dear respondent, I am a graduate student in the department of Management, Wolaita sodo

University. Currently, I am undertaking a research entitled ‘the management factors affecting the
operational efficiency of micro business enterprises he case of bodit town’. You are one of the
respondents selected to participate on this study. Please assist me in giving correct and complete
information to present a representative finding on the current status of the factors affecting the

31
performance of Micro and Small enterprises in bodit town’. Your participation is entirely
voluntary and the questionnaire is completely anonymous.

Finally, I confirm you that the information that you share me was kept confidential and only used
for the academic purpose. No individual’s responses were identified as such and the identity of
persons responding will not be published or released to anyone. All information was used for
academic purposes only. Thank you in advance for your kind cooperation and dedicating your
time.

Instructions 1. No need of writing your name and indicate your answers with a check mark (√) in
the appropriate space.

SECTION 2: GENERAL INFORMATION ON BUSINESS ENTERPRISES

i. Sex A. Male B. Female

1. What is the main activity of the enterprise?

A. manufacturing B. Construction C. service D. other…………

2. How did you raise funds to start-up your business?

A. Personal saving B. Family C. Banks

D. Micro finance institutions E. Friends/Relatives F. Iqub/Idir

G. Others (specify) -----------

3. Which one of the following aspect is the most important for the success of your business
venture? A. A business plan B. Business opportunities
C. An entrepreneurial team D. Training in business skills

E. Other please specify …………………..

4. Do you have business plan?

A. Yes B. No C. I haven’t but I’m plan to prepare for the future

5. What is your attitude regarding to the preparation of business plan?

32
A. It is tiresome to prepare B. It couldn’t add value to my business

C. It is mandatory to sustain in the business D. Other specify ……………..

SECTION 3: FACTORS AFFECTING THE PERFORMANCE OF MICRO AND SMALL

ENTERPRISES

The major factors that affect performance of MSEs are listed below. Please indicate the degree
to which these factors are affecting the performance of your business enterprise. After you read
each of the factors, evaluate them in relation to your business and then put a tick mark (√) under
the choices below.

Where, 5 = strongly agree, 4 = agree, 3 = undecided, 2 = disagree and 1= strongly disagree.

5. Please indicate the degree to which you agree with the following statements concerning
politico-legal factors.

5. Politico-Legal Factors 5 4 3 2 1
5.1 The tax levied on my business is not
reasonable
5.2 Bureaucracy in company registration and
licensing
5.3 Lack of government support

6. Please indicate the degree to which you agree with the following statements concerning
working place factors.

6. Working Place Factors 5 4 3 2 1

6.1. Absence of own premises
6.2 Current working place is not convenient
6.3 The rent of house is too high

7. Please indicate the degree to which you agree with the following statements concerning
technology factors.

33
 7.Technological Factors 5 4 3 2 1
7.1 Lack of appropriate machinery and equipment
7.2 Lack of skills to handle new technology
7.3 Lack of money to acquire new technology

8. Please indicate the degree to which you agree with the following statements concerning
infrastructural factors.

8. Infrastructural factors 5 4 3 2 1
8.1 Power interruptions
8.2 Insufficient and interrupted water supply
8.3 Lack of sufficient and quick transportation
service

9.Please indicate the degree to which you agree with the following statements concerning
marketing factors.

9. Marketing Factors 5 4 3 2 1
9.1 Inadequate market for my product.
9.2 Searching new market is so difficult.
9.3 Absence of relationship with an organization
that conduct marketing research.
9.4 Poor customer relationship and handling.

10. Please indicate the degree to which you agree with the following statements concerning
financial factors.

10. Financial Factors 5 4 3 2 1

10.1 Inadequacy of credit institutions.
10.2 Shortage of working capital.
10.3 High collateral requirement from banks and

34
other lending institutions.
10.4 High interest rate charged by banks and other
lending institutions.

11. Please indicate the degree to which you agree with the following statements concerning
management factors.

11. Management Factors 5 4 3 2 1

11.1. Lack of clear division of duties and
responsibility among employees.
11.2. Lack of well trained and experienced
employees.

12. Please indicate the degree to which you agree with the following statements concerning
entrepreneurship factors.

12. Entrepreneurial Factors 5 4 3 2 1

12.1 Lack of motivation and drive.
12.2 Lack of persistence and courage to take
responsibility for ones failure.
12.3 Absence of initiative to assess ones strengths and
weakness.
13. Please indicate the degree to which you agree with the following factors that have a direct
influence on the performance of your business?

13.General Factors 5 4 3 2 1
13.1 Politico-legal factors.
13.2 Working space factors.
13.3 Technological factors.
13.4 Infrastructural factors.
13.5 Marketing factors.

35
13.6 Financial factors.
13.7 Managerial factors.
13.8 Entrepreneurial factors.

14. Please indicate the degree to which you agree with the following statements concerning the
current available opportunities of MSEs in the city.

14. The current available Opportunities of MSEs 5 4 3 2 1

14.1. Growing expansion of credit institutions.
14.2. Adequate supply of technological inputs.
14.3. Availability of place for operation.
14.4. Availability of supply chain of inputs in the
city.
14.5 Strong market relationship

36