Factors Affecting the Performance of Small and Medium Enterprises in Bole Sub-City Administration

Abstract

The purpose of this study was to assess the factors affecting the performance of small and medium enterprises in Bole Sub-City Administration in Focus. To conduct this study, the descriptive and explanatory methods were employed. A total of 111 SMEs owners were involved as sample respondents in the study. Simple random sampling was employed. The collected data were analyzed by descriptive statistics such as frequency count, percentage, mean, standard deviation, t-test, and p-value and tested the confidence interval respectively. Data were analyzed using the “Statistical Package for the Social Sciences” (SPSS) version 24 software. The finding shows that, limited skill and knowledge about the emerging technology and the sample SMEs owners unable to bring technology based production strategy as ascertained by their high rating and significantly affecting the growth of SMEs in the case Sub-city. Furthermore, shortage of physical infrastructure, lack proper IT infrastructure to run their business, lack of adequate water supply, frequent interruption of electricity, limited access to roads and lack of proper transportation were also affects the performance of SMEs in Bole Sub-city. The result of the study indicated that, government policies and difficult regulatory landscape, too much taxation, the presence of illegal similar types of enterprises, frequent tax compliance and mismanagement of clients by concerned offices were significantly affecting the growth and performance of SMEs. Finally, lack of organized market channels and production capacity, low R&D expenditures to expand SMEs, problem of under-utilization of capacity, inability to meet environmental standards, incompetent management, and undeveloped sales channels were among the factors that significantly affecting the growth and performance of SMEs. On the basis of these findings, the study recommends that, in order to accelerate innovation and entrepreneurial activities of SMEs the government should support and facilitate the acquisition of new technology and skill required to operate machinery. And also, support services for the acquisition of new technology and skill development will lead SMEs to acquire the necessary tools for innovation, whereas this can increase the capacity and performance of SMEs.