An Analysis of Key Success Factors of MSEs: a Comparative Study of Bahir Dar City and Bahir Dar Zuria (Rural) District, Ethiopia

Abstract

In spite of their importance as social and economic functions, every business exposed to the risk of failure as well as to the possibility of success when operating in the business environment. The current study aims to answer the factors behind the success and challenges of micro and small enterprises(MSEs) in Bahir Dar Zuria (rural) district and Bahir Dar City. From the total enterprises running in the two localities, 120 samples were taken ( 80 from Bahir Dar City and 40 from Bahir Dar Zuria district). Correlation analysis along with T-TEST and Z test was utilized to assess the authenticity of the data. Except for enterprise operation years, age, the correlation between characteristics of enterprises and enterprise success were significant in Bahir Dar city whereas in Bahir Dar Zuria district they were insignificant for all characteristics of enterprise (< 0.05). Of the eleven success factors treated in this study only family support was insignificantly (< 0.05) associated with success of MSEs in Bahir Dar city whereas in Bahir Dar Zuria district HRM, business plan and networking were insignificantly associated. The comparison of the correlation coefficient of each success factors with success of MSEs had shown no significant difference between Bahir Dar Zuria district and Bahir Dar city. Of the fourteen challenges facing MSEs, lack of sufficient capital, unfavorable business laws, strong competition, and high cost/shortage of premise were the most pressing ones common to both localities.