Factors determining the success of micro and small enterprises in jimma town

Abstract

The micro and small enterprises (MSEs) play critical role in the development of the country. MSEs bear special significance for countries where density of population is very high because it offers huge employment opportunities and income generations at low cost. Considering the importance, the main objective of the study was to investigate the factors affecting the growth of MSEs in Jimma town. For the sake of achieving this objective, primary sources of data were collected through structured questionnaire from a sample of 95 MSEs which were selected using a stratified random sampling technique from a population of 5,629 MSEs among those industries engaged in manufacturing, construction, urban farming, trade and service activities. The data collected using the questionnaires were analyzed using descriptive statistics and econometric model (OLS) with the aid of Statistical Packages for Social Scientists (SPSS).Hence, growth of MSEs measured in terms of capital change was affected by different factors including owners/operators age, education level, prior experience, MSE’s age, initial employment, BDS, access to training and market. Accordingly, the ANOVA result indicates firm age, initial employment, business development service, access to training, and market related factors were found statistically significant factors. While, owners/operators age, educational level, and previous work experience were found insignificant factors in determining MSEs growth in Jimma town. Therefore, government, non-government organizations and MSEs development agencies should motivate, help and advise the owners of MSEs on their overall business activities; give training on business issues, arrange forum and exhibitions for experience sharing; and solve the effect of insignificant factors with Corporation of other organizations.