Abstract:
It is recorded that most of the business bodies in Ethiopia are micro and small
which have been an instrumental component in GDP and core for work
opportunities. Even though the identification of the important roles that micro
and small enterprises play in the country, their evolution is mostly bounded by a
number of factors, such as the existence of rigid laws, shortage of infrastructures,
financing problems etc. that frustrate the growth of the sector as reviewed from
the previous researchers. The main objective of the study was to determine the
factors that affect financial performance of micro and small business enterprises
in Nifas silk lafto sub city administration. To achieve this objective the necessary
data was collected from micro and small business enterprise owners by using
questionnaires. The study employed a mixed research approach i.e. both
quantitative and qualitative research approaches. Stratified random sampling
technique was used to select proportional number of samples from the target
population of the study. The researcher used both descriptive and multiple
regression analysis methods to analyze the raw data which was obtained from the
respondents. The finding of the study shows that problems related with shortage
of infrastructures, lack of human resources knowledge and skill, bureaucracy in
company registration and getting a license, instability in tax policy and high tax
rate have a negative significant effect on financial performance of small business
enterprises in Nifas Silk lafto sub city administration. On the other hand; on
existence of government policy related problems such as; regulatory laws, labor
laws and reporting laws positively contributes to the performance of micro and
small business enterprises in the town. Based on the findings of the study the
researcher recommends that the government and other concerned bodies for the
development and performance of micro and small business enterprises in
collaboration with the enterprise owners should alleviate the problems related
with infrastructures, human resources knowledge and skill and government
policies in order to achieve higher performance of small business enterprises in
the town.
