Effect of Internal and External Challenges on Micro and Small Enterprises’ Prospect

Mikrie Fekadu

doi:10.7176/ejbm/11-1-06

Abstract

The purpose of this study was to assess the effect of internal and external challenges on Micro and Small Enterprises’ prospect in Debretabor town. The research type employed to conduct this study was descriptive survey method in 200 owners of MSEs in Debretabor town. As to the tools that the researchers used were questioner, focused group discussion and unstructured interview. These were involved in 34questionnaires that contain 4 questions on owner’s information and 6 questions on external challenges, 20 questions on internal challenges and 4 questions about enterprises prospects. Regarding to the unstructured interview for Debretabor town MSEs Office and Debretabor Poly Technic College, 8 unstructured items were used. For focused group discussion 4 topics were administered.The result of the this study shows that prospects of SMEs can be negatively affected by Marketing problem followed by control and evaluation problem, environmental challenges and financial problems respectively in Debretabor town.Generally speaking, as the researcher has seen those back-ups from the study, there must be an immediate and strict measure should be taken by the local government and owners of MSE. Such as to solve the problem of finance, the government should develop specially loan system/strategy for SMEs with minimum collateral amount at fair interest rate. At the same time owners of MSEs should create a means of solving financial problems by forming informal financial sources association like “Equib” and through savings. MSEs should create an effort to compete with large companies by forming unions, and associations rather than competing independently and the local government also should encourage and improve the situation to MSEs owners to operate in different sectors to minimize the intensity of competition among themselves. And lastly owners should avoid unplanned withdrawal of cash for personal use and should apply principles of business entity concept. Keywords: Challenge, prospect, micro and small enterprises DOI : 10.7176/EJBM/11-1-06

Highlights

Operating in MSEs provides a freedom to operate independently, increasing personal savings by making profit and provides personal satisfaction as well as increases a countries economy
A research conducted by Mohammed, (n.d) in Nigeria the Nigerian MSEs are affected by three categories factors: external environment which consists, marketing, technology and information access; entrepreneurial readiness, which consists of social network, legality, capital access, government support, business plan; and characteristics of entrepreneur which consists of, age, gender, work experience education characteristics of enterprise, origin of enterprise, length time in operation, size of enterprise, capital source and location
The study showed that external challenges such as intensity of competition, tax burden, small market and www.iiste.org population size in the area and poor infrastructure are the challenging factors for MSEs prospects

Summary

Introduction

Operating in MSEs provides a freedom to operate independently, increasing personal savings by making profit and provides personal satisfaction as well as increases a countries economy. MSEs are found in a wide array of business activities, ranging from the single artisan producing agricultural implements for the village market, the coffee shop, the internet café Textile and garment, Leather crafts and shoe making, Wood and metal works, Construction, Food processing, Municipal Activities, Kiosk shops, “Gulet” and manufacture of furniture ( Habtamu, n.d). This indicates that the sector is a potential area to solve unemployment problem and makes beneficiary specially poor societies like unemployed youth & women, Universities and TVET school graduates, school drop outs, existing MSEs such as weavers, street vendors, traditional handicraft operators, people who live on the Street.

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