FACTORS THAT INFLUENCE THE PERFORMANCE OF SMALL BUSINESS

ENTERPRISES (A CASE STUDY IN BAHIR-DAR TOWN)

A RESEARCH PAPER IN PARTIAL FULFILLMENT FOR THE REQUIREMENTS

OF BACHELOR OF (BA) DEGREE IN ACCOUNTING AND FINANCE
UNDER THE GUIDANCE OF
DOCTOR SUNITHA.DOCTOR IN ACCOUNTING AND FINANCE

BAHIR DAR UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE

JUNE, 2018

BAHI R DAR, ETHIOPIA

DECLARATION

We, AGMAS ABATE (ID No.0801907),ANDEBET DESSIE(ID No.0801941),AHMDIN

ADDISS(ID No.0801909), ABRHAM BELAY (ID No.0801890),AMLAK WALELIGN (ID
No.0801935),hereby declare that the senior essay –Research paper, entitled “FACTOR
THAT INFLUENCE THE PERFORMANCE OF SMALL BUSINESS ENTERPRISE(IN
CASE STUDY IN BAHIR-DAR TOWN) submitted to Bahir-Dar university, college of
business and economics , department of accounting and finance, in partial fulfillment of the
requirements for the award BA degree in accounting and finance is a record of original and
independent Research Paper work done by our group during JANUARY- JUNE 2018 under
the supervision and guidance of Doctor SUNITHA, Doctor in accounting and finance ,
COBE, Bahir-Dar University, Ethiopia and it has not formed the basis for the award any
degree/diploma/or other similar title to any candidate in any other university

Advisor name Signature Date

Dr Sunitha --------------------- -----------------

Examiner Signature Date

------------------------------- ----------------------------
------------------------

Examiner Signature Date

------------------------------- ---------------------------- -------------------------

 ACKNOWLEDGEMENTS
It is the grace, mercy, charity, forgiveness, help and kindness of the almighty God- Jesus Christ that
made us still alive, achieve this success and strength and to go through all the difficult time.
then, we would like to give our grateful appreciation to our Advisor Dr. sunitha for her
constructive suggestions especially, her invaluable and prompt advices, comments, suggestions,
especially her respect great good impression to us, and encouragements. Without her assistance
and guidance, this study would not have been completed. we also greatly indebted to our class
mate and our secretary ------ for their unreserved help and encouragement. We are also thankful
to individuals working in Micro and Small Business Enterprises development Agency of Bahir-
Dar Sub City Administration for making available all the information necessary for the
completion of this research paper.
Last but not least, we want to express our great thanks to our family, who helped us financially
and morally.
TABLE OF CONTENTS
CONTENT PAGE

Declaration i
Acknowledgment ii
Tables of content iii
List of tables and charts 4
Abstract 4
CHAPTER ONE
1. Introduction 1
1.1 Background of the Study 1
1.2 Background of the organization 2
1.3 Statement of the problem 3
1.4 Research question 4
1.5 Objectives of the study 4
1.5.1 General objective 4
1.5.2 Specific objective 4
1.6 Significance of the study 4
1.7 Scope of the study 5
1.8 Expected limitations 5
1.9 Definition of key terms 5
1.10 Organization of study 6
CHAPTER TWO
2. Theoretical Literature Review 7
2.1 definition of macro and small business enterprise 7
2.2 Ethiopia small business 7
2.3 Existence of illegal business 8
2.4 Feature of small business 8
2.5 Micro and Small enterprise 8
2.6 Reasons why small businesses succeed or fail 9
2.6.1 Lack of entrepreneurial and managerial skill 9
 2.6.2 Capital 9
2.6.3 Tax
2.6.4 Shortage raw material
2.6.5 Inadequate finance 10
2.6.6 Outdated method of production 10
2.6.7 Lack of marketing facilities 9
2.7 Innovation 9
2.8. Importance of micro and small-enterprise 10
2.9 The owner manager 10
2.10 Special contribution of micro and small enterprise in Ethiopia 11
2.11 Empirical Literature Review ……………………………………………… 22
CHAPTER THREE
3. Research Methodology………………………………………………… 11
3.1 Research approach…………………………………………………………… 11
3.2 Research design…………………………………………………………….. 11
3.3Data types and source……………………………………………………….. 11
3.4 data collection method……………………………………………………….. 11
3.5 Sample technique and sample size………………………………………………11
3.6 Data processing and analysis…………………………………………………… 12
CHAPTER FOUR
4. Data presentation Analysis and Interpretation …………………………………….34
4.1 Demographic information about respondent…………………………………….21
4.2 General information about small business enterprise……………………………….21
CHAPTER FIVE

5, Introduction, Conclusions and Recommendation……………………. 39

5.1Conclusions ....................................................................................................... 41
5.2 Recommendations………………………………………………………………. .45
Reference………………………………………………………………..
Appendix……………………………………………………………………… 34
 LIST OF TABLE

Table 1 demographic information about respondents.............................

Table 2 types of small business, time starting of business and initiation to start
business...................................................................................................

Table 3 factors affecting to run small business........................................

Table 4 purpose of profit and cause of non-profitability...........................

Table 5 the relationship between the business owners ..........................

Table 6 system used to be successful competition..................................

Table 7 opportunities of training..............................................................

Table 8 Government support for small business………………………………

Table 9 initial capital, sufficiently to run business and reason that makes not
borrowing from credit association ………………………………………..

Table 10 influence product modification to run the business...................

LIST OF CHART

Chart 1profitability of the business .........................................................

Chart 2 fairness of government tax.........................................................

ABSTRACT
Identifying the factors that influence the performance of small business enterprise
is essential for their objective attainment. The overall objective of this study is to
identify the problem that influences the performance of small business enterprise
with special emphasis on retailer shop, whole seller shop, hotels, cafeteria barber,
metal work and wood work in shembit,belay zeleke,tana,hidar 11 and fasilo 3 in
Bahir- Dar sub-city. This study would be useful for the owner of small business as
well as trade and transport development department of the study zone and also
provide useful information for researcher.

The study would be conducted by using primary data. Primary data would be
collected by using questionnaire and unstructured interviewing of the manager of
micro and small business enterprise agency in Bahir-Dar administration city. The
researcher used judgmental sampling technique and took a sample of 60
respondents out of 3028 total populations. The result of the study elicited major
challenges which seem to influence the performance of small business in the sub –
city which includes: inadequate finance, problem of taxation, problem of product
modification, lack of training program, and lack of government support, lack of
market opportunities and lack of coordination, inadequate infrastructures
development and poor management practice. From the above factor financial
problem and unfair tax is the major bottle neck problem that prevents attainment
of overall objective of the small business enterprise. In order solve the problem the
Government, private and non-Governmental sector shall be participate in the
development of small business enterprise by bespread source of financial
opportunities, impose fair tax, prepare training program about product
modification, Great coordination in the market, arrange credit requirements and
view banks and other credit institution interest rate. The researcher accomplished
this research with 758 birr of total cost.
 CHAPTER ONE
1. INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The development of small scale enterprises is a primary means of strength the
economy of any country. These small scale enterprises are the life blood of most economies
today. Most of these small scale enterprises are labor intensive and are therefore able to great
jobs at relatively low cost. can make major contribution to the nation’s economic well-being.
Majority of these small scale enterprises, however, do not grow to any reasonable size generate
income at acceptable level of activity.
Small business can be service rendering firms, manufacturing organization, merchandise
business and small scale industries. Several factors that influence the performance of small
business such as production technology, availability of raw materials, managerial skills of
owners, taxation system imposed by government, availability of infrastructures and owners
awareness about product modification. Therefore, this study focuses on the factors that
influence the performance of small business enterprise in Bahir-Dar town.
Small business can respond more quickly and at a least cost than big business to the
quickness rate change in product and service, processed and markets. It has become more
attractive to flinted, individualistic men and women. Small business has the potential to create
or capture on entries on industry. The incentives to innovate are greater the motivation to
innovate is greater. Small business supply products and services more cheaply whose sales
volume is small, those products close personal contact with customers and those that must meet
each customer unique the needs they are major creators of new jobs.
Small firms less concerned with formal system and its decision making process will be more
judgment, involve fewer individuals and can therefore quicker. It can much more responsive to
changes in the market place. But conversely is much less able to influence such developments.
small firms likely to adjust more quickly. It come to existence only because their owners in
correctly observe market signals.
Small business the decision made by owners will be implemented more quickly and less likely
to be diluted by subordinated. They have a good knowledge of their markets and industry, close
contact with customers and a commitment to quality, particularly of service they seek out
creating for themselves a market machinery and innovation (often in market sense) and flexible
they focus on cash flow. Small business have is own strengths and weakness, its strength
include financial performance (small manufactured on the average, earn a high return on their
investment than do large business manufacture) innovation (small business people tend to be
more risk whose ideas are their stocking trade) its weakness includes failure, chiefly due to ease
of entry and lack of material propertied (Sirpplis Nicholas 1997(8).
1.2 Background of the organization
Micro and small enterprises caught the attention of development practitioners and policy
markers recently not only because of its important interims of generating employment also
because of other Attributes, some of these are;
• Small business enterprises are breeding ground for entrepreneurs.
• The sector has high employment generating capacity, and is less capital intensive.
• It is high completive, flexible and innovative. Having recognized the importance of
small business enterprise sector to the economy.
Until 1997, there were no organized policy and support system catering to the development of
small business enterprises sector. The government of Ethiopia has issued on small business
enterprise development strategy in 1997 followed by the proclamation for the establishment the
federal agency for micro and small enterprise development in 1998.
The regional government of amhara also develops a regional strategy and set Bahir-Dar town as
micro and small development agency in 2000. The overall objective of the micro and small
enterprise strategy of town is to create an enabling environment for the development growth the
micro and small enterprise sector in Bahir-Dar town (micro and small business administration
agency in Bahir-Dar city). The specific objective includes.
• Facilitate economic growth and equitable development.
• Create long- term jobs
• Strength co- operative between micro and small enterprise.
• Provide the base for medium and large scale enterprise.
• Balance preferential treatment between micro and small enterprise
 1.3 STATEMENT OF THE PROBLEM

It is true that small business have a vital part to play in the economy of the country. Small
business owner is an individual who establishes and manages business for the principal purpose
of furthering personal goals.
Introducing of new method through which business activities takes place is the basis for
starting small business. For doing this, managerial skill of the business owners plays an
important role. The owners should be gather information regarding product market condition as
well as changes take place environment and act accordingly. The owners also understand his
customer and treat politely and respectively. If the owner has managerial skill his business
activities performed smoothly and lead to profit. If not the business, lead to bankrupt .In
general managerial skill of the owner affects small business (woldayAmha (1997p. 2-3).
The tax system of any government is general the product of its own environment. Government
has a right to impose taxes on the operating business and collect the tax revenue from them.
The tax collect from the operating business has a great important for raising revenue for
government. But payments of the tax for the small business are mostly not balanced with their
activities because the government tax mostly not match with owner’s fluctuation income. At
present the tax system for the small business is among the most factors that discourages the
development of small business. So taxation is the server problems in small business.
Finance is the base point for any business activities lack of adequate finance has always been
major problem of Ethiopia small business, since small business do not have easily access to the
capital market because they organized on proprietary basis and very small in size and their
supplies which can be utilized to loan are negligee small firms are not public company’s his
means they often have problem of rising.]. Before starting small business the owner of the
business should consider with the product lines well adequate on the new culture. Will they sell
in quantities large enough and at price high enough to be profit tables as well the owner should
analyze the components of product to determine what features need to be adopted to ensure that
the product meet both perceived quality and perform quantities. Large number of small firms
they do not think for making modification. But what is gaining good profit for them is doing
things better though differentiating their product from other competitors. If not they adopt
product and service already present in the market their selling volume and attracting new
customer become less. Most small business characterized by of awareness for product
modification. (Jim dewhust and hure (1993, . 136).
1.4 Research question
• What are the major factors that influence performance of small business entrepreneur?
• How the amount of tax imposed by government affect performance of small business
entrepreneurs.
• Why most small business owner deliver the product/service that already exist in the
market?
• Why small business entrepreneurs have not sufficient capital with their activities?

1.5 OBJECTIVES OF THE STUDY

1.5.1 General Objective

The general objective of the study is to examine the factors that influence the performance
(overall objective) of small business enterprise in Bahir-Dar town and come up with a feasible
recommendation for the identified problems.

1.5.2 Specific Objective

• To assess the influence of capital on performance of small business and capital seeking
power of small business.
• To assess government impose of tax on small business and how it well instance their
business activity.
• To identify factors that influences each firm to make product modification.
• To identify any problem that influence business activities to take place an effective
manner in identified area.

1.6 SIGNIFICANCE OF THE STUDY

The study focuses on factors that influence performance of small business Bahir-Dar town. The
outcome of this study will be useful for the owner of small business enterprise as well as the
trade and transport department.
Generally study is believed to have the following importance
• It provides useful information for the owner of small business concerning problem
facing small business and to develop strategies to minimize those problems.
• It provides information for the trade and transport department of zone what factors
influence performance of small business and suggestion to solve those problems.
• To suggest some possible solution with the factors influence small business it may help
as a great importance for the further researcher who like study on similar in depth.
• Provide valuable information for government and their interested body to take some
corrective action

1.7 SCOPE OF THE STUDY

The scope of the study cover assessment of the problem that influence the performance of small
business enterprise in Bahir-Dar town such as managerial skill of owners, financial problems,
taxations system imposed on those small business and awareness of small business about
product modification.
The study is delimited to Bahir-Dar town only due lack of sufficient time, resource and skill.
1.8 EXPECTED LIMITATION
The success of every study greatly depends on the availability of resource with conductive
environment. However some of the limiting factors that the researcher faced while conducting
this research paper will the following.
• Problem of language and computer skill to perform our task
• Limited number of sample size from large population.
• The unwillingness of the respondents to give information related to factors that influence
the performance of small business.
• Lack of sufficient written document with full information in concerned office.
5. The concerned party does not give information by interview only giving soft copy it is not
obvious for as.
1.9 DEFINITIONS OF TERMS
Business information: Deals with the provision and management of information, content
and knowledge in organizations.
Cooperatives: association of two or more individuals who are from the same area
Enterprise: It refers to a unit of economic organization or activity whether public or
Private engaged into the manufacturing of goods, selling and merchandising activity
Entrepreneur attributes: Are character traits or personality traits.
Equb: A voluntary, informal, and indigenous form of rotating saving and credit scheme,
where each member contributes a mutually agreed amount of money on weekly or monthly
basis.
Factors: A factor is a contributory aspect such capital, government tax,
Product modification influences that affect performance of small enterprises
Finance: The science that describes the management, creation and study of money,
Banking, credit, investments, assets and liability
Government policy and Regulation: A plan or course of action, as of a government,
Political party, or business, intended to influence and determine decisions, actions, and other
matters.
Informal sector: illegal business don not pay tax to the government that means they have the
advantage of providing goods or service at lower pries
Initial paid-up capital: is that part of the issued capital of an establishment that has been paid by
the owners to start the operate
Micro enterprise: means commercial enterprise whose capital is not exceeding birr 20,000
other than high technology and consultancy services.
Performance: The accomplishment of a given task measured against preset known standards
of accuracy, completeness, cost, and speed.
Small enterprise: means a business engaged in commercial activities whose capital is
Exceeding birr 20,000 and not exceeding 500,000 birr, other than high technology and
Consultancy service institution
1.10 Organization of the Study
The study was presented in five separate chapters. The first chapter is an introduction part
which includes background of the study, statement of the problem, research questions,
objective of the study, and significance of the study, scope of the study, expected limitation,
definition of key terms and organization of the study. Subsequently, chapter two, present
important related literature review whereas, chapter three present the Researcher methodology.
Chapter four is about data presentation, analysis and interpretation and finally, the last chapter,
presents, conclusion, and recommendation
CHAPTER TWO

2 THEORETICAL LITERATURE REVIEW

2.1 Definition of Micro and Small Enterprises

The definition of micro and small enterprises is still controversial. There is no generally
accepted definition of micro and small enterprises. Micro and small enterprises in one country
may be small or medium enterprises in the other country. This it depends on the stage of
economic development of the country (GebrehiwotAgeba, 2004).
In Ethiopian context the definition of micro and small enterprises is given as a small business
enterprises found in all sector of country economy with a paid up capital (fixed asset) of not
more than 20,000 excluding high technological consultancy firms and other high technological
establishment while small enterprises are business enterprises with paid up capital not more
than birr 500,000 and excluding high technological consultancy firms and other high
technological establishment( Ministry of trade and industry, 2008).

2.2 Ethiopian Small Business

Starting a business is not an event but a process which may take many years to evolved and
come to fruition. Small scale business as well as small scale industries in Ethiopia has not been
able to contribute substantially as needed to the economic development particularly because of
technical knowledge, financial, production and marketing problems. There problems are still
major hand japer to be development. Lake of adequate finance and credit has always been a
majority problem of Ethiopian small business.
An entrepreneur is an individual who established and manages a business for the principal
purposes of profit and growth. But small scale enterprises find it difficult to get raw material of
food quality at cheaper rates in the field of production, and then they do not get raw material in
time. (Haile G/Tinse 2003:p.4).
2.3 Existence of illegal business
Illegal businesses do not pay tax to the government that means they have the advantage of
providing goods (service) at lower price. Because their cost is lower by the amount (if tax that
should have been imposed on them and they affect those legal business. The competition
among legal and illegal business are unfair competition. (Proclamation No, 166, p.60).

2.4 Feature of small business

Small firms are different from larges some of its characteristics are:-
The owner manger has, Views and values will influence all aspects of its activists. This means
that business decisions will often become personal decision and the logic of the balance sheet
will not always apply. There also the risk of over dependence up on one individual for the well-
being of the firm.
• Most small businesses are unlikely to be able to exert much influence on their market. They
are price takers in the Elastic economic sense and are likely to face significant completion.
• Employees are low level of education and without appropriate and specific training.
• Based on imported technology with a high proportion of vehicles machinery and imported
tools and fixtures in the composition of capital.
• Mainly concentrated in retail and also formed in significant numbers in manufacturing and
services.
• It is independent in the sense that is does not from part of a larger enterprise and its
ownership is relatively free from outside control in its principal decisions.
• The main financial source is the in formal credit rotating saving schemes like iqub,
individual lenders etc.

2.5 MICRO AND SMALL BUSINES ENTERPRISE

Micro and small industries (enterprise) are major feature of the economic land scope in all
developing countries to the creation of jobs and to all aviation of poverty has been recognized
by many third world government that have been give prominence in may development place as
well as in the strategies of many body. (Credendum and Donald, mead 1998, p. 194).

2.6 REASONS WHY SMALL BUSINESS

Succeed or fail?
The pivotal role of small business suggests that understudying why business succeeds or fail is
crucial to economics health and satiability, among from this unbalance tax amount imposed by
the government which is not consider annual cash flow or turnover asset of the small business
enterprise. Source of capital is the major factor to success or fail why because capital is major
engine to do something or not to do. In addition to this product modification also major factor
to influence the performance of small scale enterprise

2.6.1 Lack of entrepreneurial and managerial skill

The study conducted on small business have released that there is a general lack of knowledge
in entrepreneurial managerial capacity; In face it is often easier for man and women to go in to
business of themselves than to find employers. No law stops them from choosing to be their
own bass and they can chose almost any line of business they like. but business run by people
without prior managerial experience. This means that business owners without marketing skill
and lack of finance they have a great chance of failures than others with marketing skill
(Siropollis, 1997:p, 11). Small business are owned by one person or small group of people and
managed by their owners, who with all management usually with the other little help. In our
country most of micro and small enterprises launched without a feasibility report. Moreover,
wherever such reports were prepared, the purpose was to use them as advice to obtain
institutional finance than to serve as a plan to make the unit a success. Though majoring of the
entrepreneur possess production skills, there are weak in aspects like marketing, finance,
personnel management, general administration, accountings, and public rapport. The lack
resource to employee techno craft to handle these matters (Terry Hill, 1987).

2.6.2 Capital
Businesses that start with food little investment by owner have a greater chance of failure than
business with adequate investment by owners. The most serious obstacle to doing business is
that of raising investment capital and lack of sufficient in an able funds and facilities. Hence
financing stands out as one of the greater problem facing in small business sectors (Siropdilis
1997: p 10).
2.6.3 Tax
The government has a right to impose tax on the operation of business and collect the tax return
from them. The tax collected from the operating business has great importance in the raising of
revenue for federal government, and in providing incentives for certain types of economic area.
Hence, when there is high taxation the owner of the business may fail to pay the tax end it is
one of the impact for the failure of the business.(Proclamation N0308/2002)
 2.6.4 Shortage of raw material;
Procurement of raw materials of required quality, and quantity competitive price is the most
serious faced by this sector. Though the institutional arrangements regard to the allocation
mechanism often work against the interest of these. This is more pronounced in the case of
scare raw materials that have to be imported. Besides, frequent interruptions in the availability
of essential raw materials prevent fuller and economic utilization of productive capacity of
small units (Simon Bridge, Ken O’Neil and Stan Cromie, 2003)
2.6.5 Inadequate finance
Most of the micro and small enterprises depend on external finance or non-institution. Financial
assistance by the various agencies, like financial corporations and commercial bank, often falls
much short of their requirements. In order to supplement the institutional finance micro and
small enterprises have to approach the unorganized money market at terrible heavy rates of
interest or on suppliers credit on exceedingly unfavorable terms Private finance, ultimately
spoil the unit and cause for sickness in the small business (Balu, 2000).
2.6.6 Outdated method of production
Most of small scale business in developing country has production method of low technological
level. Modern techniques which have revolutionized the industrial production in the relatively
highly industrialized countries are yet to be an integral part of the sector. Thus, old method of
production has resulted in their continued low productivity and poor quality of the good (ibid,
2000).
2.6.7 Lack of marketing facilities
Micro and small enterprises entrepreneur faces problems in the matter of marketing his
product. Due to want to adequate co-operative or other marketing facilities and intelligence
often suffers from remunerative price of their goods in the open market. In free market
economy especially with stiff competition marketing is a key factor for the success of small
business (Gebretinsae, 2003).
Beside, a bulk of units are engaged the production of consumer grads where tastes,
Altitude needs continue to change with quick frequencies. In this matter, this unites
Suffer from inadequacy of market research, intelligence and a good information system. Even
when this information is available, these units lack flexibility to adopt themselves to the
changing situation (TerryHill, 1987).
2.7 Innovation
Innovation should be the ground bare for operational activities of small business,
entrepreneurial and managerial skill of the owner of such firm are essential to promote the
business to growth and profitability. If the owner (manager) has adequate knowledge of
material skill and entrepreneur skill of the owner (manager) will lead the business to loss and
more severely to death. If its operations remain static while the eternal environments charging
and the completion is becoming fiercer (Pouiburns and Jim hurts dishonor 1996: p.29).
2.8 Importance of macro and small-scale enterpriser.
Small business sectors are a wide spared and vibrant sector. It is also a dynamic and turbulent
sector with multitude of business moving in and out. Most importantly they are statically
significant in development for various reasons out lined below
• All small enterprises broadly defined, display are mark capacity to absorb labor thus
constructing to easing the pressure of unemployment's.
• They produce relatively cheaper goods and service locally using labor intensive method
satisfying the needs of (particular the poor) people nonce contributing the variety of
consumer goods.
• They are able to mobilize savings appropriator who would not use the banking system
hence increasing the propensity to re-invent.
• They are great reliance in indigenous resources raw materials.
• They are feasible and adapt to market changer quickly.
• They are generally lode foot advertisement also convenient for geographical spread of
industrialization.
They have speeds for entrepreneurial and managerial talent to develop and matter. The critical
shortage of which is often strained of a majority handicap to each a mice development,
particularly in developing countries like Ethiopia (WoldayAmha 1197: p. 7-10).
Based on our understanding we try to categories in to main topic
The employment potential: Micro and small enterprises are labour intensive comparatively
and thus create more job opportunities per unit of capital employed. It is therefore that leaving
a side highly capital intensive industries involving most sophisticated technological and the
building up of economic and social infrastructural facilities it is which help enlargement of job
opportunities (ibid 2000)
Distribution of income: the income generated in large number of micro and small enterprises
is depressed more widely in community than income generated in a few large enterprises. Thus,
the income benefit of micro and small enterprises is derived by a large segment of population
while the large enterprises encourage monopoly capital and concentration of economic power
in this way, micro and small enterprises about an equal distribution of income and wealth (ibid,
2000).
Foreign exchange earnings: Small businesses facilitate substantial foreign exchange
savings and earnings. A wide variety of consumer and simple procedure good can be procedure
economically on micro and small enterprises basis.
Economic transformation: Micro and small enterprises play strategic role in the progress of
a country. These include the industries by large represent a stage in economic transition from
traditional to modern

2.9 THE OWNER- MANGER

In economic terms a small business in one that has relatively there of its market and its
managed by its owner or part of owner is personalized way and not through the medium of
formalized management structure more over it is independent of a large enterprise and the
owner should be free from outside control in taking other principal decisions (Paul burns and
Jimnurst 1996; p.18).

2.10 Special Contribution of Micro and Small Enterprises in Ethiopia

As a part of business community, small firms welfare. They produce a sustained portion of our
total goods and services. Thus, their general economic contribution is similar to that of big
business, small firms, however, possess than quality that make them more than immature
variation of big business corporations. They make exceptional contribution as they provide new
jobs, introduce innovation, big aid business, stimulate competition, and produce goods and
services efficiently (Hayla, 2003).
Provide new jobs:-As the population grows, small businesses provide new job opportunities. It
seems clear that small business provide “Lion’s share” of new jobs, sometime adding jobs
while large corporation are “Downsizing” and lying off employees (ibid, 2003).
Introducing innovation: - New product that originate in the research laboratories of big
business make valuable contribution to our standard of living. There is question, however, as to
relative importance of big business in achieving the truly significant innovations. The record
shows that many scientific betake through originated with independent investors and small
organizations. Studies of innovation have shown the greater effectiveness of small firms in
research development. Innovation contributes to productivity by providing better products and
better method of production (Lasser, 1989).
Stimulation economic competition: - According to Haylay (2003) many economists,
beginning with A. smith, have expounded the values inherent in economic competition. In a
competitive business situation, individuals are driven by self-interest to act in a socially
desirable manner. Competition acts as the regular for that transforms their selfishness in to
service. When produces consists of only a fief big business, however, the customer is at their
mercy .They may set high price, with hold technological developments and exclude new
competitors or otherwise about their position of power.
Aiding big business: - the facts that function as more expertly performed by small business
enable small firms to contribute the success of large ones. If small business were saddled with a
myriad of activities , that they should perform only in efficiently .Two function s that small
business are the distribution and supply function (ibid,2003).
Producing goods and services efficiently: - The continued existence of small business
competitive economic system is in itself evidence of small business operation .If small firms
are hopeless and inefficient , they will make no useful contribution .They would be forced out
of business quick by stronger competition . We believe that small business contributes in a
substantial way to the economic welfare of our society (Lasser, 1989).

Empirical literature review.

Study done in South Africa by JS Wiese (2014:100) on determinant factors of

sustainability shows owners or managers with more experience (managerial, sector or
previous micro and small enterprise experience) tend to have a greater inclination towards
growth and was also Considered essential criteria for sustainability . Woldie, et al.,
(2008:12) and Mbugua, et al., (2014:17) argue that small and medium enterprise
owners or managers with more experience (managerial, sector or previous small
businesses experience) tend to have more growth potential than those with a lack of
expected potential and also the higher the level of education attained by the
owner/manager, the higher the likelihood of growth of the enterprise. Managerial skills
and experience affects businesses performance at certain level. Since small Businesses
account for sizeable proportions of economic activity, therefore, and since they are An
importance source of dynamism and innovation, small business management skills should
be a primary focus for economic policy in general and for innovation strategies in
particular (Keith, 2001:41). Small and medium entrepreneur are faced with a challenge of
accessing financial Means to get their businesses off the ground and make them grow and be
sustainable.

According to Simeon and Lara (2005:72) Micro and small enterprise appear to be
disproportionately afflicted by the underdeveloped nature of financial institutions in
developing countries. For various reasons ranging from a lack of collateral to bias against
small firms, micro and small enterprise Tend to face greater financial constraints than do
large firms. The study done in Kenya related To financial management of micro and small
enterprise identified the heavy investment in Inventory-ties up capital which in the end reduces
firm‟ profitability therefore, there is need for a Tradeoff between receivables and holding
inventory if the firm is to attain the required profits (Charles etal., 2014:14). Marketing
activities such a s product/service marketing, marketing research and information and
promotion impact negatively on the performance of small and medium enterprise due to
lack of marketing skills by small and medium enterprise owners. The study conducted in
Nigeria by Ebitu et al., (2015:75) identified most of problems encountered micro and small
enter Prices are marketing related some of which include inability to apply modern marketing
techniques. and strategies, difficulty in managing the firm’s advertising and other promotional
tools, competition From large firms, lack of adequate research, poor and mundane production
technology, lack of Adequate financing of marketing activities, poor quality products and
problems of standardization, warehousing, inventory control, and poor transportation facilities,
branding/packaging, financing and Credit facilities, and risk bearing among others. These
problems are capable of impeding, disrupting and hindering the growth, development and
expansion of the firms in its effort to satisfy its target market and also create value for the
organizations. According to Noghor (2015:77), micro and small enterprise are facing
challenges brought about by Changes in technological environment; hence they are failing to
keep abreast of these changes. Large businesses, because they have the advantage of being
technologically advanced, end up poaching .The micro and small enterprise market niche and
resulting in micro and small enterprise being kicked Out of the game. Failure not to employ
the latest technology means producing at higher cost than do competitors in the market
thus, eventually exiting the market due to tough competition. Though micro and small
enterprise are considered an important source of job creation and economic Growth, their
survival is a difficult task for managers for they have typical characteristics that end up
becoming barriers to their development. According to Olawale, (2014:926) reason for failure is
Lack of management experience, lack of functional skills, poor staff training and development,
Poor attitudes towards customers, unavailability of a logistics chain and a high cost of
distribution, competition, rising costs of doing business, lack of finance and crime. The reason
for failure of micro and small enterprise identified by Mariana, (2014:8-9) lack of customer,
previous experience in the field of business, lack of knowledge or managerial experience, lack
of government Policies to support small business, the lack of bank credit.

A study has been conducted by Abera (2012:75-76) on Factors Affecting the Performance of
Micro and Small Enterprises by using stratified random sampling of 261 micro and small
enterprise from two major sub cities of Arada and Lideta in Addis Ababa. According to this
study, the main internal factors identified were management factors which include poor
selection of associates in business, lack of strategic business planning, and costly and
inaccessible training facilities. The major entrepreneurial factors include lack of persistence and
courage to take responsibility for one’s failure and absence of initiative to assess ones strengths
and weakness. He further noted that the contextual factors such as financial, workings
premises, marketing and infrastructure had very high effects on the performance of micro and
small enterprise compared to other factors in the research area and it’s prevalent to the
businesses.
In a survey conducted on micro and small enterprise in selected cities in Ethiopia by Minister
of urban development and constriction (2013:104), they identified a number of factors
including inadequate Coverage of the support services, low level of education among the
operators, limited relevance of the trainings and exclusion of the most of the private micro and
small enterprise operators from the Support services provided by the government.

The other study which has similar finding indicates Drbibe et al., (2013:25) poor infrastructural
Facilities, lack of access to finance, lack of knowledge and skills, lack of working premises,
lack of access to market, lack of necessary support from relevant institutions, shortage of raw
materials, and regulatory problems as major challenges.

The major constraints identified by various studies on micro and small enterprise in Ethiopia
are Associated with market and finance problems. According to Gebreyohannes (2015:85)
Market is the major constraint that highly hinders the e firms‟ performance for all sectors
in the manufacturing Micro and small enterprise. About 43% of the enterprises‟ sales
performance is below their expectation level and in few cases there is no sale at all. This
problem is attributed to lot of factors as the location of the working premise and the display
facilities is away from the main road, burden of tasks in the entrepreneurs, lack of competitive
business skill, lower price of product offered by the Informal sector and promotion of the
sector is focused more on its role in poverty reduction than its business role as quality products
and thus the customers came with expectation of lower price than to get quality products with
fair price in the market. As clearly stated in Terfasa et al.,(2016:30) the access to finance
appears to be a very severe or major obstacle as reported by about 55% and 64% of micro and
small scale enterprises respectively. The problem of access to finance is more severe for small
enterprises compared with micro enterprise as the latter often have access to microfinance
institutions (MFIs) as their loan requirement is within the capacity Of MFIs. A large proportion
of both micro and small enterprises have not applied for a loan or credit due to cumbersome
bureaucracy, limited working premises, and high collateral requirement.

In this Literatures on small scale enterprise, particularly those done in Bahir-Dar, are not
conducted on overall performance aspects of the sectors. This research is therefore, meant to
address the factors Influencing the performance of small scale enterprise in a holistic way by
targeting and deeply investigating those operators engaged in, merchandising, servicing and
manufacturing activities.

CHAPTER THREE

3. RESEARCH METHODOLOGY
3.1. Research Approach
The researcher would have been used qualitative research approach in order to achieve research
objectives. The qualitative approach helps us to analyze and interpret the data what we would
have got from target respondents by distributing questionnaires to respondents by using tables
and percentages.
3.2. Research Design
In our study we used descriptive types of data analysis based on table and percentage. The
ground for selecting descriptive type of research design is that, it would help us to interpret and
present the data that we would gather by using tables and percentages. And also it was help us
to describe characteristics of a particular event and to make conclusion and recommendation
based on analysis.
3.3. Data Type and Source
The researcher would have been used primary data. The primary type of data would collect
from the target respondent’s by distributing questionnaires and through unstructured
interviews.

3.4. Data Collection Method

There were different methods of data collection which were useful to collect data while
conducting research. But for our study, in order to get relevant information for our study we
would have been used both close choice and open ended questionnaire and unstructured
interview.
3.5 Sampling technique and Sample size
An appropriate sample size would take from the total population to distribute questionnaires.
The target groups for this research were small business owners in Bahir-Dar city .among them
we select 5 kibles these were shembit, belayzeleke, tana, hidar 11 and fasilo 3.in order to
analysis we tried to group in to service ,merchandise and small industry. The researcher would
have used judgmental sampling technique due to its simplicity, to select 20 respondents from
each merchandise, service activity and small scale from the total 3028 population in Bahir-Dar
city

3.6. Data processing and Analysis.

The process would be carried out in clear way to reach the objective of the study after the
necessary primary data have been collected and would be started by editing. The data would
analyzed by using descriptive statistical tools such as table and percentage. Thus, the analysis
was expected to come up with findings that were easy to understand and relevant to meet the
research objectives. The results would be presented in the form of tables and percentages.
Conclusions of the research would be drawn based on the result.
 CHAPTER FOUR
4. DATA PRESENTATION, ANALYSIS AND INTERPRETATION
Questionnaires were distributed to respondent and 60 were collected. the presentation, analysis
and interpretation of the data were made depending up on the information gathered mainly
through questionnaire and un structure interview the information gathered about the factor that
influence performance of small business practice in Bahir-Dar town from people who own
small business.
 4.1 Demographic Information about Respondents

Table 1 item Respondent

Percent number

sex

A, Male 34 56.6%

B, Female 26 43.4%

Total

2 Age distribution pattern

A,10-20 10 16.7%

B,20-30 30 50%

C,30-40 12 20%

Above 40 8 13.3%

Total 60 100%
 3 Educational status

Illiterate 4 6,7%

A,1-6 10 16.7%

B,7-9 2 3.3

C,10-12 21 35%

E, Above 12 23 38.3%

Total 60 100%

4 Marital status

A, Married 29 48.3%

B, Unmarried 27 45%

C, Divorced 3 5%

D, Windowed 1 1.7%

Total 60 100%

Source: from primary data

As indicated the above table of item 1 are 34(56.6%) owners of small business in the town are
males, 26(43.4%) of owners of small business the town are females. From this the researcher
concluded that male is more employed than female. This may be having not absolute equality.
Item 2 of the above table shows that 10(16.7%) owners of small business are between the age
10-20, about 30(50%) of them are between age of 20-30, about 12 (20%) of them are from
between 30-40, and about 8(13.3%) of them are above 40 years. From this the researcher
concluded that most owners of small business are between the ages of 20-30.this may be which
an active group is which mean can do any activity based on the morality.
Item 3 of the above table shows the education status of the owner of small business are a
accordingly, 23(38.3%) of them learn above 12, about 21(35%) of them are learn 10-12 grade,
about 10(16.7%) of them are learn 1-6, about 4(6.7%) of them are illiterate are and about
2(3.3%) of them are learn about 7-9 grade. From this the researcher concluded that the highest
percentage show that whose education level are above 12. From this the researcher concludes
that most the small business owners are educated.

As depicted in the above table 1 of item 4, 29(48.3%) of owners of small business in the town
are married about 27(45% of them are unmarried about 3(5%) of them are divorced and above
1(1.7%) of them are windowed. The researcher can conclude that the most owners of small
business are married. This may be they have many dependent family from them
4.2 General Information about Small Business Enterprise
Table 2 types of small business starting of business and initiation to start business.

No Item Respondent

In number In percentage
5 Type of business

A, Merchandise 34 56.7%

B, Service 20 33.3%

C, Small scale industry 6 10%

Total 60 100%

6 Time of start of the business

A, Anciently 32 53.3%

B, Recently 28 46.7%

Total 60 100%

7 Initiations to start the business

A, Government encouragement 6 10%

B, Availability of raw material 7 11.7%

C, Market opportunities 16 26.6%

D, for generating profit 31 51.7%

Total 60 100%
source: from primary data

As indicated the above table of item 5 are 34(56.7%) respondents in the town are engaged in
merchandise, 20(27.3%) them provide service and 6(10%) of the respondents engaged a small
scale industry. From this researcher concluded the dominated of small business sector in the
town is merchandise. This may be easily started by small finance.

Item 6 of the above table shows, 32(53.3%) of respondents response as they start performing
small business activities anciently. While 28(46.7%) reply as they start performing this
activities recently. Form this researcher concluded that most of owners of small business has
high experience in anciently to performing activities.

Item 7 of the above table shows, 31(51.7%) of them response that their initiation to start small
business is for generating profit while 16(26.6%) respondents reply as their town initiation to
start small business are gate market opportunities, about7 (11.7%) of them response that their
initiation to start small business are availability of raw material, and 6(10%) of them response
of their initiation to start small business are Government encouragement.

From this researcher concluded that the most of owners of small business in the town start
these activities for generating profit. From this the researcher understand in the first they open
for the purpose generating profit but after opening the business they cannot generate profit by
different cause so this lead for only moral satisfaction means only survive to live and to
sustained the business in hope may generate profit in the future.

Table 3 factors affecting to run small business

No Item Respondent

In number In percent
 8 Cause

A, Lack of education 7 11.7%

B, Financial problem 13 21.7%

C, Problem of fairness tax 40 66.6%

TOTAL 60 100%

Source: primary data

Item 8 of the above table shows, 40(66.6%) owners of small business in the town response as
the factors affecting to run business are problem of fairness of tax, about 13(21.7%)
respondents respond as the influence to run business financial problem and 7(11.7%) of them
are lack of education.

From this the researcher concluded that the major problem to run the small business is
problems of fairness tax. So that the researcher concludes that Government should impose tax
according to their fluctuation income/profit because profit is not constant through the year

Chart 1 profitability of the business

profitability of business

YES
NO
46.70%
53.30%

Source: - from primary data

As indicated the above chart of 32(53.3%) owners of small business in the town respond as
their business are not profitable and about 28(46.7%) of them respond as their business
activities has profit. From this researcher concluded that more than half or 53.3% of small
business in the town lead no profit. This may be the cause lack of finance, lack of
infrastructure, problem of fairness of tax, and lack of product modification, deliver similar
product that existing in the market and lack of Government super vision.

Table 4 purpose of profit and cause of non-profitability

No Item Respondent
In number In percent
 10 Purpose of profit

A, For buying raw material 6 21.5%

B, For establishing other business 10 35.7%

C, Consumption purpose 12 42.8%

Total 28 100%

11 Cause of non-profitability

A, Lack of managerial skill 2 6.3%

B, Low quality product 3 9.4%

C, Problem of market 27 84.3%

Total 32 100%

Source:- from primary data

As indicated the above tables shows, 12(42.8%) owners of small business used gained profit for
consumption purpose and about 10(35.7%) owners of small business respond as they use profit
gained for establishing other business, and 6(21.5%) owner of small business to respond they
use profit for buying raw material.
The researcher concluded that the most owners of small business perform the activities for
consumption purpose due to lack of sufficient profit.
Item 11 of table 4 shows as 27(84.3%) owners of small business in the town respond the factor
that cause unprofitability of the business is problem of market, about 3(9.4%) owner of small
business in the town respond the factor that cause unprofitable is low quality product, and
2(6.3%) owners of small business in the town responds the factor that cause unprofitability of
the business is lack of managerial skill.
From this the researcher concluded that the most unprofitability cause is problem of market.
This may be the owners cannot gain market opportunities that are managed by concerned from
concerned body, which means luck of coordination among supplier raw material and demander
the product that produced by the small business owners .

Table 5 the relationship between the business owners .

No Item Respondent
number percent

12 relationship with competitor

A, Yes 60 100%0

B, No 0 0%

Total 60 100%

Source: - from primary data

As indicated the above tables in item 12 shows that 60(100%) all of owners of small business
in the town have good relationship with their competitor. It can be concluded those that all
owners of small business in the agreed with their competitor in buying, selling and other
activities and they can help each other by different lending and borrowing activity.
The researcher concludes from this is all business owner have good relationship to their
customer for the purpose of attracting to them.

Table 6, System used to be successful competitors

 No Item Respondent
In number In percent

13 System use to competition market

A, Produce high quality product 24 40%

B, Treat customer in good manner 21 35%

C, Sale at low price 15 25%

Total 60 100%

Source:- from primary data

As indicated in item 13 of table 6, about 24(40%) owners of small business use a system of
produce high quality product to became successful competitors, about 21(35%) owners of small
business used a system of treat a customer in good manner to become successful competitor
and about 15(25%) of them use system of selling at low price to become a successful
competitors.
From this the researcher can be concluded that most owners of small business in this town used
a system of producing high quality product to become successful competitor.
Table 7 Data presentation whether the sector get an opportunity of training or not
No- Item Respondent
In number percentage
14 Opportunities of training
A, Yes 13 21.6%
B, No 47 78.4%
Total 60 100%
Source: primary data
The number of relevant training program made a variable to small enterprise in Bahir-Dar
Town have been very minimal .As it is show in the above table only 13(21.6%)of the total
respondents get an opportunity of training ,The remaining which is the largest percentage
47(78.4%) of the respondent are no getting an opportunity of training . The general lack of
awareness about the spread of an already existing facility and what they offer to small
enterprise sector or those interested in a business career constitute one of the major or short
coming of the whole training program.
Table 8 Data presentation on government support for small business
No ITEM respondent

number percentage
15 Government support
A, Yes 3 5%
B, No 57 95%
Total 60 100%
Source; primary data

According to Nicholas (1997) the development of small business supported by various

government policy of the country of that contributes for that area as well as the country
development. As it can be seen from the above table from total population 3(5%) responds that
government support their business running and the remaining 57(95%) is accounted for those
respondents who responds the government does not support their business.
Generally the support of government in town toward the sector is less, for success fullness of
business, it needs support from different part internally and externally, beside this government
or other concerned party must support the essential requirement like arrangement of financial
facilities, prepared training program, great market opportunities and market place, fulfillment
of infrastructure (water, electricity, road facility) from this according to the respondent
electricity the major concerns that the government must be respond.
Table 9 Initial capital to run small business respondent

In number In percent

16 A,5000-10000 41 68.3%

B, 10,000-20,000 7 11.7%

C, 20,000-30,000 8 13.3%

D, Above 30,000 4 6.7%

Total 60 100%

17 Sufficiently of capital

A, Yes 20 33.3%

B, No 40 66.7%

Total 60 100%

18 Factors that affecting to borrow from the

credit association.

A, High interest are 20 50%

B, No credit association around 0 0

C , Other specify 20 50%

Total 40 100%
Source:- from primary data

As indicated the above tables in the item 16 shows that 41(68.3%) owner of small business
initial capital is between 5000-10,000, 8(13.3%) owners of small business initial capital is
between 20,000-30,000, 7(11.7%) owners of small business initial capital between is 10,000-
20,0000 and 4(6.7%) owners of small business initial capital is above 30,000.
From this the researcher concluded that most of owners of small business in the town perform
their activities with small capital. This may be having not enough collateral for credit
institution; the culture of borrowing is low and no interest free bank for Muslims.

Item 17 of table 9 shows that 48(80%) owners of small business respond that as they have “no”
enough capital to run the business and 12(20%) owners of small business respond as they have
enough capital to run the business. From this the researcher concluded that most of small
business owners have no sufficient capital to run the business.

Item 18 of table 9 shows that 20(50%) owners of small business respond as they did not
borrowed any money from credit association due to high interest rate, and no response given by
respondents for no credit association around. From this we understand most small business
owner did not borrow money from credit association due to high interest rate and other factors
are mentioned by respondent like:
1. Requirement of guarantee which means in order to gate money from credit association they
must to form group at least 3, requirement of personal pledge who is government employee
have minimum monthly salary 5000 birr and person who can borrow money must have a house
in order to gate credit from credit association.
2. No interest free bank for Muslims
3. Credit given by corruption
From this the researcher concludes the Government should reduce interest rate and modified
the requirement of credit policy in order to give credit to the owner of the small business
enterprise.
19. What option do you use if customer not satisfied with your product? The respondent asked
this and mentioned the following options:
 1. Producing high quality product
2. Reducing cost
3. Redesign the product and features
The researcher conclude by producing high quality product can satisfied customer because
most costumer become pries insensitive and become more quality concerns,

Chart 2

fairnes of government tax

20%
YES
NO

80%

Source: - from primary data

As indicated the above chart 4 shows that 48(80%) owners of small business respond as the tax
imposed by government is not fair and 12(20%) of them respond as the tax imposed by
government is fair. From this researcher concluded that the tax imposed by the government on
a small business influences the activities in the town. This may be the respondent capital not
really determined known, improper guess of capital of the respondent and the government must
impose fair tax according to fluctuate income.
Table10, Influence product modification and run of business

No Item Respondent
In number In percent

21 Factors that influence to make product

modification

A, Climate condition 3 5%

B, luck of knowledge about product 24 40%

modification

C, User habit 17 28.3%

d, Inadequacy of raw material 16 26.7%

Total 60 100%

22 Accessibility to the market

A, Yes 31 51.7%

B, No 29 48.3%

Total 60 100%

Source: - from primary data

As indicated the above tables in item 1 shows that 24(40%) owners of small business respond
that factor influence to make product modification is luck of knowledge about product
modification and 17(28.3%) of them respond that factor influence to make product
modification user habit, about 16(26.7%) owner of small business respond that factors
influence to make product modification is inadequacy of raw material and 3(5%) response is
climate condition. From this the researcher can be understood that most factors that influence to
make product modification is luck of knowledge about product modification so the concerned
party proposes training opportunities about product modification to the owner of small
business.

In a free market economy especially with stiff competition marketing is a key factors for the
successes of small enterprise (Gebertinsae, 2003) As stated on the above table 31(51.7 of the
respondents did not gate accessibility to market, while 29(48.3%) the owners did gate market
accessibility .This shows that sector are facing a serious problem related to its access to
market.
Generally geopolitical location of the town is attractive for different business expansion so
conducting appropriate research about market demand of micro and small enterprise may lead
to market success of the sector.
23. What challenge you face while running your business in bahir- dar town .the respondent
mentioned some challenge to run their business:
Like 1. Financial problem
2. Market availability
3. Lack of infrastructure
4. Lack of access to the market
5. Unfair tax
The researcher concludes that financial problem is the factors that challenge to run the small
business enterprise. So the Government should arrange credit to the owner of small business
enterprise in order to achieve their overall performance.
Result of Unstructured Interview from manager of micro and small business enterprise in
Bahir-Dar Town administration agency.
The trade and transport bureau of Bahir-Dar town was established for the purpose of
accomplishing the overall objective of small enterprise in the town. Trade is among the major
income source of the urban dwellers.
Industry, even though the motive power for achieving rapid economy development is limited to
the small scale industries like grain mills, wood works and certain traditional hand crafts
activities hence, medium and traditional hand crafts activities hence, The situation of the
industrial activities is presently at very rudimental stage and mostly based up on back ward
technologies.
 As the head of bureau respond that small business in the town has the following
problem.
 Lack of sufficient capital
 Marketing problem
 Storage of supply of new material
 Sticking to traditional way of production
 Poor design, poor quality and finishing under expectation, absence of supporting
institutions agencies to handle particular needs of micro and small enterprise
 Lack of access to appropriate, relevant and understandable information and device.
 Lack of development of specialization and concentration in management as most of the
owner of micro and small enterprise get involved in one or more business activities like
hotel trade, transport etc.

 The head of bureaus also respond that to alleviate the above problem the bureau of the
town design the following strategies.

 Access to raw material and quality service at affordable place.

 Town development association and private investor shall be encouraged to establish

business start up premises.

 Consider steps to provide incentives information and advice should be focused and
sector directed as possible and it should be supplied of gross roots level as possible.
 Encourage co-operation between relevant government institution as well as private
organization to reach and mobilize training and monitoring support for small
enterprises.

 Establish a marketing information centers and to integrate the already started marketing
information system in the town micro and small enterprise development openly.
 CHAPTER FIVE

5, introduction, Conclusion and Recommendation

5.1 INTRODUCTION

In this chapter the conclusions and recommendations are discussed. For clarity purpose, the
conclusions are based on the research objectives of the study. Based on the findings of the study
recommendations are made to government bodies or other concerned party to the owner of small
business and suggestion for other researchers.

5.2. CONCLUSION

The study is emphasis to assess the factors that influence performance of small business in
Bahir-Dar town. It aims at identifying problem of small business in the town such as, financial,
tax and awareness about product modification.

Financial problem is the most problem that influence performance of small business enterprise
in the town. Most owners have problem of enough capital to run the activities so smoothly
manner. It there is no enough capital to producing quality product (service) and competing with
competitors and impossible becoming the winner. Again most owners of small business
enterprise in the town have lack of ability and lack of market accessibility.

The government issues of tax on small business firms not balance to their capital, because the
owner’s not tell specific capital, at that time the staff to became guess improperly then the tax
pay does not equipped with the activities them running. So, this also affects the performance of
small business or the Government must be considering the owner fluctuate income.

Lack of awareness about product modification is highly existed in the town. Most owners of
small business in the town engaged on the same activities rather than making product
modification but gain good profit is making unique form accordingly. Because of they offer the
product (service) already offered by others their selling volume and attracting customer become
less.

5.3. RECOMMENDA
The following are some of the promotional assistance that should address by government
involvement, NGOs and private sector for the micro and small enterprise in Bahir-Dar Town.
 Assess to finance
 Small enterprise site the lack of finance as a greatest constrain to their growth .The
financial need of different types of small enterprise vary widely with access problem
particularly sever for startup enterprises .So in this regard ,the government ,privet
sector and other sector should Encourage and create an enabling environment for
establishment of more financial institution that avail funds. Reply the policy of bank to
avail credit to small enterprise according to their ability and divesting range of
collateral types.
 Government polices
The nature of the government policy is also another determinant factor for the success
of small enterprise .despite its importance ,it have so many impediments which affect
the smooth operation of the sector as it is indicated in the analysis part of this
study .To overcome these problems . The government should have to improve taxation
and marking them to pay according to their ability. The government should relax it is
policy with regard to the number of members and not limiting the number of groups
they forms by their interest
 Since the tax imposed on the small business owners in the town influence their running
activities, the government should put this tax consideration balance it with the activities
of owners of small business imposed by the Government.
 Training should be given for owners of small business in the town how they react to
product modification, is importance to become successful competitors in the market.
 Because of most owner of small business in the town respond that they have no any
training before. So, training must be given for the owners of small business regarding
how they manage their resources and how they plan, what activities they should
perform to improve their working style.

 Access to market
 To overcome the problem related with market the following should be recommend
small enterprises product service match with the presently demanded by consumer or
 market. Assisting small enterprise in advertising their product through mass media such
as: -Radio. TV, New paper and by using other mechanism, establishing market
information centre that would collect analysis, store and disseminate market related
information on:-
 Price
 Source of input
 Existing and potential market
 Consumer need
 Access to training and promotion
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 Simon josehbridge,kenneil and stancromie(2003) Entrepreneur AND Small

business ,5TH edition
 Siropolis, Nicholas (1997) Small Business Management. 6th edition.
 Terry hill,(1987) small business production and operation 2nd edition
 WoldayAmha (1997) Small Scale Enterprise and Entrepreneurship Development in
Ethiopia.
 APPENDIX

BAHIR DAR UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE

Dear respondent

 We are graduate student in department of accounting and finance, in Bahir-

Dar university .currently, we are undertaking research entitled “factor that
influence the performance of small business enterprises in Bahir-
Dar city ’’ you are one of the respondent selected to participate on this
study. Please assist us in giving correct and complete information to present
a representative finding on the current status of the factor influence the
performance of small enterprise in Bahir Dar City
 For the following question put right ( )sign from your choice and write
your answer in the blank space

Section I Demographic

1. Sex A. Male B. Female

2. Age A. 10-20 B. 20-30 C.>30

3. Educational status

3.1 Literate A. 1-6 B. 7-9

C. 10-12 D. >12

3.2 Illiterate

4. Marriage status A. Married B. Unmarried

 C. Divorced D. Widowed

Section II about Business

5. What types of business are you running?

A. Merchandise B. Service

C. Small scale industry

6. When you start the business?

A. Anciently B. Recently

7. What makes you start the business in Bahir-Dar town?

A. government encouragement

B. Availability of raw material

C. market opportunities

D. for generating profit

8. Which factors affecting to run the business?

A. Lack of education

B. financial problem

C Problem of fairness of tax

9. Does the business you run lead profits? A. Yes B. No.

10. If the answer of question no-9 is yes, for what purpose you use that the profit?

A. For buying raw material purpose

B. For establishing other business
 C. Consumption purpose

11. If the answer of question No 9 is no what make it unprofitable?

A. Lack of managerial skill

B. Low quality product

C. Problem of market

12. Have you good relationship with your Compotator?

A. Yes B. No.

13. What system you use to be successful competitors in the market?

A. Produce high quality product or service

B. Treat customer in good manner

C. Sale at low price

14 do you get opportunities of training?

A. Yes B. No.

15. Does the government support to run the small business?

A, Yes B, No

16. What is your initial capital to run the business?

A. 5000-10,000 C. 20,000-30,000

B. 10,000-20,000 D. Above 30,000

17. If your capital enough to run the business?

A. Yes B. No.

18. If your answer to question No 18 no why you no borrowed from

Credit allocation?
 A. High interest are
B. No credit association around
C. Other specify ---------------------------------------------------------------------------------

19. What option do you use if customer not subsisted with your product?

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20. Is the tax government imposed on your business is fair?

A. Yes B. No.

21. What factor influences you to make product modification?

A. Climate condition

B. Low level of education

C. Users habits

22. Do you get accessibility to market to running the business?

A. Yes B. No

23 what challenge you face while running your business in Bahir-

Dar---------------------------------------------------------------------------------------------------------------
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 ባህርዳር ዮኒቨርስቲ
የቢዝነስ እና ኢኮኖሚክስ ኮሌጅ
የአካውንቲግ እና ፋይናንስ ትምህርት ክፍል
የደንበኞችመጠይቅ
ውድ የጥናቱ ተሳታፊዎች፤
እኛ በባህር-ዳረ ዩኒቨርስቲ የአካወንቲንግ እና ፋይናንስ ትምህርት ክፍል በቢዝነስ እና በኢኮኖሚክስ ቅድመ ምረቃ
ተማሬዎች ስንሆን በአሁኑ ስዓት የመመረቂያ ፅሁፋችን በማዘጋጀት ላይ እንገኛለን፡፡የጥናታችን ርዕስም በባህር ዳር
ከተማ የሚገኙ የጥቃቅንና አነስተኛ የንግድ ተቋማት አፈፃፀም ላይ ተፅእኖ የሚሳድሩ ተግዳሮቶችን ይመለከታል፡፡እርስዎም
በዚህ ጥናት እንዲሳተፉ ተመርጠዋል፡፡እርሱም የሚሰጡት ትክክለኛ መረጃ ለጥናቱ ውጤታማነት በጣም አስፈላጊ መሆኑን
በመገንዘብ መጠየቁን በትንቃቄ እንዲሞሉልን ስንል በአክብሮት እጠይቃለን፡፡

 መልስዎን በሳጥኑ ውስጥ የእርማት ( )ምልክት እና በክፍት ቦታው ላይ ይፃፉ፡፡

 ክፍል አንድ፡ጥያቄዎችን ስለ ተጠያቂዎች አጠቃላይ መረጃ

1. ፆታ ሀ/ ወንድ ለ/ ሴት

2. እድሜ ሀ/ 10-20 ለ/ 20-30 ሐ/ 30-40 መ/ ከ 40 በላይ

3. የትምህርት ሁኔታ

3.1 ያልተማረ

3.2 የተማረ ሀ/ ከ 1-6 ለ/ ከ 7-9

ሐ/ ከ 10-12 መ/ ከ 12 በላይ

4. የትዳር ሁኔታ ሀ/ ያገባ ለ/ ያላገባ

ሐ/አግብቶ የፈታ መ/የሞተበት/ባ

ክፍል ሁለት.ሰለጥቃቅንና አነስተኛ ጠቅላላ መረጃ

5. አሁን ¾T>Ñ–<ƒ በምን አይነት የንግድ ሥራ ላይ ነው?

ሀ/ ነጋዴ ለ/ አንዳንድ አገልግሎቶች

ሐ/ በጥቃቅንና አነስተኛ ኢንደስትሪ

6. ይህንን ሥራ መስራት የ Ë መ\ƒ መቼ ነው?

ሀ/ በቅርብ ጊዜ ለ/ ቆየት ብሎዋል

7. ይህንን ስራ ለመስራት ያነሳሳƒ ነገር ምንድነው?

ሀ/ የመንግስት ድጋፍ ሰላለ ለ/ የጥሬቃ አቅርቦት ሰላለ

ሐ/ የገቢያ አጋጣሚ ሰላግኘሁ መ/ ትርፍ ለማግገኘት

8. የትኛው ችግር ነው ሥራ ለማስኪሄድ ተፅኖየሚያሳድረው?

ሀ/ የትምህርት ችግር ለ/ የጥሬ ገንዘብ አለመኖር

. ሐ/ የግብር አጣጣል ፍትሐዊ ስላልሆነ

9. አሁን እየሰራህ ያለው ሥራ ት`ፋ T ነው?

ሀ/ አዎ ለ/ አይደለም

10. በጥያቄ ቁጥር 9 ላይ መል eአዎ ከሆነ ትርፉ ለምን አይነት ጥቅም ታውለው/ታውይው አለሽ? 

ሀ/ ለጥሬቃ ግዢ ለ/ ሌላ ሥራ ለማቋቋም

ሐ/ ለቤት አስቤዛ

11, ለጥያቄ ቁጥር 9 መልሰዎ አይደለም ከሆነ ትርፋማ እንዳይሆኑ ያደረ Ñ ዎት ዋነኛ ምክ”ያት ምንድነው?

ሀ/ የማስተዳደር ብቃት ስለሌለኝ ለ/ የምርቱ የጥራት ማነስ

ሐ/ የገቢያ ችግር ሰላለ

12. ከጓደኞችዎ ጋር ጥሩ የሆነ ግንኙነት አለዎት?

ሀ/ አዎ ለ/ የለኝም
13. በገበያ ላይ ውጤታማ ተፎካካሪ ለመሆንዎ ምን አይነት ዘዴ ይጠቀማሉ?

ሀ/ ጥራት ያለው እቃ በማቅረብ ለ/ ደንበኞችን በመልካመ ስነመግባር በማስተናገድ ሐ/ በተመጣጠኝ ዋጋ በመሸጥ

11. የስልጠና አጋጣሚ አግኝተዋል?

ሀ/አዎ ለ/ አላገኘሁም

15. ስራችሁን በአግባቡ ልመወጣት ከመንግስት ድጋፍ አግኝታችኋል?

ሀ/ አዎ ለ/ አላገኘሁም

16. ሥራውን ለመስራት ሲጀምሩ መነሻ ብር ምን ያህል ነበር?

ሀ/ ከ 5000-10000

ለ/ ከ 10000-20000

ሐ/ ከ 20000-30000

መ/ ከ 30000 በላይ

17. ሥራውን ለመስራት መነሻ ገንዘቡ በቂ ነበር?

ሀ/ አዎ ለ/ አይደለም

18. የጥያቄ ቁጥር 17 መልሰዎ አይደለም ከሆነ ለምን ከብድር ተ s ም ብድር አልወስዱም?

ሀ/ ወለዱ ከፈተኛ ስለሆነ ለ/ በአከባቢው የብድር ተ s ም ስለሌለ

ሐ/ሌላም ካለ
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19. ደንበኞችዎ በእረሶ ምርት እረካታ ባያገኙ ምን አይነት ምርጫዎችን ይጠቀማሉ?

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20. መንግሥት በሥራ ላይ የጣለብዎት የግብር ክፍያ ፍትሀዊ ነው?

ሀ/ አዎ ለ/ አይደለም

21. ምርቶችን ለማሻሻል ተፅኖ የሚያሳድሩ ምክኒያቶች ምንምን ኛቸው?

ሀ/ የአየር ሁኔታ ለ/ የትምህርት ደረጃ ዝቅተኛ ስለሆነ

ሐ/ የደንበኞች ፍላጎት መ/ የጥሬቃ ችግር ስላለ

22. ምርታችሁን ለመሸጥ የገቢያ አቅራቦት አግኝታችኋል? G/ ›

K/›ÃÅKU

23. ስራችሁን በአግባቡና በተገቢው ሁኔታ ለመወጣት/ ለመስራት ያጋጠማችሁችግሮች ምን ምን ናቸው?

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