Factors affecting the performance of small and medium enterprise (SMEs): a case study of Wandegeya

Abstract

This study is aimed to assess the factors that are affecting the performance of Small and Medium Enterprises (SMEs) in Wandegeya. The factors investigated were: Demographic characteristics (age, sex, and education level of SMEs owners), Business characteristics (age of SMEs), capital structure (source of initial capital and capital size), Legal structure (means of operating SMEs), Marketing strategy. The study was conducted in Wandegeya. The study used the cross-sectional study design in which data of 80 SMEs owners was collected at once. The study was guided by the following objectives: To determine the effect of demographic characteristics (age, sex, and education) to SMEs performance, To find out the relationship between business characteristics (age of the SMEs) to SMEs performance, To determine the effect of capital structure (source of initial capital, and capital size) to SMEs performance, Examine the effect of legal structure (Means of operating SMEs) to SMEs performance, Find out the relationship between the marketing strategies to SMEs performance Both descriptive and analysis methods were applied during the study. The results from the Chi-square test showed that, the most significant factors affecting performance of SMEs measured by the average monthly profits in the study area were Demographic characteristics (age and education level of SMEs respondents), Business characteristics (age of SMEs), capital structure (source of initial capital and capital size) and marketing strategy. Sex and legal structure did not significantly contribute to the performance of SMEs in the study. There is need for policy makers to make sure that the education is given to the SMEs owners with supporting them, if possible, there is a need of having curriculum in primary and secondary schools by making business and entrepreneurship subjects compulsory, this will help to equip learners with appropriate skills and entrepreneurship knowledge to enable them start and manage business successful.