Abstract:
The overall aim of this research was to identify the factors that affecting the financial
performances of Micro and Small Enterprises, in the Tercha Town Administration. The study
has been designed as a cross-sectional survey, and a mixed research design was
implemented. Both quantitative and qualitative data was collected from primary and
secondary data sources. The collected data was analyzed using both descriptive and
inferential statistics by using Microsoft Office Excel 2010 and Stata software. The Micro and
small enterprises were employed to measure the financial performance of MSEs in terms of
Ethiopian Birr. The mean value of annual profits in the study area was 64,657.36 ETB, and it
ranges between 5,250 and 310,000 ETB. The multiple regression models were used to
identify factors affecting the financial performance of Micro and small enterprises. Out of the
ten variables entered into the model, four were statistically significant: sex, age, family size,
and education level, are statistically significant and positively affecting MSE performance.
The major challenges affecting MSE performance are inadequate infrastructure, a lack of
selling and displaying places, a lack of working capital, poor market linkages and
information, poor accounting and record keeping, and material cost fluctuation.
Opportunities include access to labor, market access and availability, governmental support
and follow-up, training for beginners, and loan facilities. So, the local governments should
be making proper training and awareness-creation activities to make the MSEs' effective
business operations perform well.
