Performance of Micro Enterprise and Its Determinant Factors: The Case of Angacha Town, Kat Zone, Ethiopia

Abstract

This study examines the performance of microenterprises and factors that affects microenterprises in Angacha town KAT Zone. This study also inspect the cost and benefit  ratio of micro enterprise as related to financial flow and its management to measure the performance and identified the factors that influence the performance of micro enterprise in Angacha town. All 40 micro enterprises from two sub-towns of Angacha were included in the study and key informants from relevant government office were interviewed to collect necessary data on enterprises performance and determinant factors. Descriptive analyses of the data were computed to assess various characteristics of micro enterprises in the study area. According to the result obtained from benefit cost ratio analysis 71.8% of enterprises found in the study area survived whereas 28.2% failed. In addition, a regression model was used to identify the determinant factors that affected the performance of the enterprises. The results of the regression analysis showed that age of enterprises, age of operators, education level, number of employees, amount of initial capital, entrepreneurial skill, experience of manager, access to training and access to market were statistically significant at less than 1% significance level and had positive relationship with the performance of enterprises. Recommendations emanating from the study are to build up the performance of micro enterprises not only to survive in the business but also to transform into small, medium and higher level of enterprises. To improve the performance of enterprises beyond the impact of challengeable constraints, all concerned bodies should give high attention to update and initiate entrepreneurial skill by applying innovative training, ensure experience and best practice sharing system, allocate sufficient capital, upgrade education level attained and create alternative market demand, monitoring and evaluation of all benefit generated and costs incurred as well as effective utilization of employees to ensure successful operational performance of the enterprises.

Keywords: performance, determinant, factors .level of intensity, Benefit cost ratio,.