CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the study
According to Gebrehiwat (2003) the definition of Small Business Enterprise
controversial, and there is no generally accepted definition for small enterprise and it
is varies from one country to other countries. In most countries of the world the
criteria for the definition of Small Business Enterprise is related to size of
employment. The Small Business Enterprise in one country may be small, medium or
large enterprise i.e. it depends on stage of economic development of the countries. In
most developing countries medium and small enterprise by their size, location, capital
investment and their capital to penetrate greater employment have provided their
propellant effect for economic growth. However, the importance of large industrial
and other enterprise for the growth the Ethiopian economy cannot be denied. This is
because there are small, large industries which are still playing a great role in
employment opportunity and income generation for millions of the people.
According to Ubon E.E (2006) the definition of SBEs is one employing 10-100
workers and medium scale enterprises as one employing 101-300 workers while
micro is defined as one employing 1-10 workers whereas, the small business
enterprises as that one employing between 6 and 25 paid employees. A micro
enterprise can be defines in a variety of ways using such factors as the number of
employees, volume of sales, the capital of an end over and the level of capital cost per
work place. According to the draft document, Ministry of Finance and Economic
Development (MOFED, 1997) among the total population of urban area, 37% are
below absolute poverty line because, most of Small Enterprise use low skills and
machines. The advent of Small Business Enterprise is very recent phenomena in
Ethiopia history while it has been argued by different scholars about it. Yet it is
potential gear for any country in high growth and development of the economies. The
least developing countries (LDCs) can shape common problems like wide spread and
chronic absolute poverty, high income inequality, low and stagnant level of
agricultural productivity, low domestic saving and so on (Todaro, 2003).
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The Small Business Enterprises are those enterprises with startup capital less than &
2350 (Br 20,000) and use unsophisticated technology and most them are price takers
in economic sense and they are unlikely to be able to expert much influence and
operating in a single market or limited range of market offering a limited range of
products and services. This means the scope of firms operation is limited and less
strategic issue than that of large firms. It also mean that unlike large firms they found
it more difficult and the main objectives of small business enterprises is reducing
unemployment alleviation of vicious circle of poverty and the gradual transformation
of economy in to industrial economy by development of these enterprises in to
medium and large scale enterprises (Haily, 2003).
In sub-Saharan Africa Small Business Enterprise are those industries which have a
capital investment of less than 14,000ETB which employees less than 30 workers.
The most indicated in these categories are workshops, farmers, ice factories fines etc.
in Ethiopian context the definition of Small Business Enterprise is given as micro
enterprise are the economic with paid up capital of not more than ETB, 20,000
including a highest technological establishment, Ministry of Trade and Industry
(MOTAI, 2003).
The Government of developing countries and donors have initiated interventions to
enable small business enterprises solve the problems. With increased urban
population dynamics of sub Saharan Africa, the importance of Small Business
Enterprise is also fast growing in order to increase the economy of the countries. In
Ethiopia, it is widely recognized that, the government and donors have supported
Small Business Enterprise, which include financial services (Elias 2005). The Federal
Democratic and Republic of Ethiopia (FDRE) has recognized and given high priority
for Small Business Enterprises due to attend the development of enterprise because
they are important vehicles to address the challenges of unemployment micro and
small economic growth and income inequality in the country (Tadesse, 2013).
Ethiopia is one of the fast develop countries, whose economy is predominantly
depend upon small-scale farmers with backward technologies. Due to these, micro
and small-scale enterprise play a vital role in reduction of absolute poverty and
creation of employment opportunities and developing the economy poor countries.
The Ethiopian micro and small enterprise sector has a wide range of operators, petty
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traders to small restaurant owners; hand craft, cloth shops, a peddler in the street to a
grocery business operator etc.
The Ethiopian economy is characterized by its dualistic nature; i.e. subsistent and
modern (technological) sectors. The traditional sector consists of mainly peasant
agriculture which is backbone of the Ethiopian economy. The modern sectors are
mainly composed under development industries and service sectors. The agriculture
sector is the most important sector of the economy since it produce much of the
country’s output observes huge amount of labor force and generates large preparation
of the foreign earnings of the country (Gebrehiwot and Woldley, 2014). The Small
Business Enterprise comprise widely divergent spectrum, ranging from micro and
rural Enterprises to modern industry units by using sophisticated technologies.
Because of their contribution in each national economy the importance and emphasis
on Small Business Enterprise has been accentuated in the minds of policy makers,
planner, and industry designers. This is the consequence of recognition that the swift
from agrarian to industrial, and knowledge based on societies is not through the large
industrial house but through individual and small initiative by vision arises from small
business enterprise (Haily, 2003).
The SBEs, sector is getting more and more attention in filling gaps in the
development process. For example ,the report of CSA of Ethiopia state that, the
economic recession, adjustment policies, and continued high rate of urbanization and
growth of populations have leads to unexpected expansion of the informal sector in
many developing countries. For this reason, the SBEs could provide a significant
role in addressing the problem of unemployment (CSA 2004). The SBEs sector
everywhere is characterized by highly diversified activities which can create
employment opportunities for a substantial segment of the population. This implies
that the sector is a quick panacea for the problem of unemployment and vicious circle
of poverties. The realization of a modest standard of living through curbing
unemployment and facilitating the environment for new job seekers and selfemployment requires a direct intervention and support of the government and other
concerned stakeholders (Mulugeta, 2013).
In the cities and towns of Ethiopia, the Small Business Enterprises and informal sector
in general are the predominated income generating activities; these have a significant
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contribution to local economic development and used as the basic means of survival
for the people as a whole. Industrialization is the key economic development of
agricultural productivity in the economy. That is to ultimate the goal of economic
policy of any countries and the attainment of higher industrialization even though the
county has long history of rising manufacturing activities (Elais 2015).
1.2. Statement of the problem
Most of the developing countries are backward in their economic structure and their
population is highly depending on the substance of agricultural activities. Ethiopia is
one of the fast develop countries whose agriculture production was deteriorating from
time to time and their rural population migrate to urban areas of the countries. Since
the country is backward in industrial sector the Small Business Enterprise exists in
almost every industry. This enterprise is essential to the economic for the industrial
growth and diversification. This enterprise is account as a bulk of agricultural oriented
economic activities in Ethiopia in terms of its establishment. The Small Business
Enterprise is mostly managed by the owners and relations. The financing in most
cases in normally provide by the owners. The owners fail to realize the importance of
external source of capital in order to effort the expansion of the business enterprise.
Small business enterprise sector was one of the principal driving forces for economic
growth and job creation (Halftone Aregawi, 2015). Farther more, Small Business
Enterprise could service stepping stone for economic development. The role of small
enterprise is to utilize for recruitment of better technologies and consequence to
develop the modern and the large industries. Therefore, in Ethiopia Small Business
Enterprise has been neglected and carried untraditional manner for long period of time
and create new job for peoples and generating income for labor forces. The business
enterprises not only solve unemployment problem but also enable them to accumulate
capital and has a great role for the contribution of livelihood for the people. The
number of small scale business enterprises increases from time to time or from year to
year, due to this the employment opportunity tendency at increasing rate with
particular years.
The growth rate of Small Business Enterprises is at increasing rate in Mettu town.
From the year 2015 up to 2019 the Small Business Enterprises grow by rate of 7.9%,
11.8%, 12.6%, and 12.9% respectively (Office of Mettu small business enterprise,
2019). Even though Small Business Enterprises provide employment opportunities,
4
stimulate economic completion, provide goods and service efficiently, provide foreign
exchange earnings and play vital role in the economic growth of the countries, their
growth and expansion is low. Because some challenges that the researcher is
identifies like; Socio-cultural challenges, Lack of formal or informal linkages or
business cooperation among enterprises, Lack of sufficient marketing and
promotional support, Accessibility of training problems, and etc.
There are also some problems that the researcher was not identified like; Shortage of
raw material, managerial skill, marketing related problems is hindering the growth
and expansion of small business enterprises. Therefore, this gap was filled up by
identifying the factors affecting the growth and expansion of Small Business
Enterprises in Mettu town.
Research questions
The research questions of this study are as follows;
•
What are the major factors affecting the growth and expansion of Small
Business Enterprise in Mettu town?
•
What is the nature of marketing activities of Small Business Enterprises?
•
What are the government policies laying to supports expansions of the sector
in the town?
1.3. Objectives of the study
1.3.1. General Objective
The general objective of the study was to identify the factors affecting growth and
expansion of Small Business Enterprise in Mettu town.
1.3.2. Specific objective
The specific objectives of the research are;
 To identify the factor affecting the growth and expansion of SBE in the town.
 To identify and analyze the nature of market situations in relation to Small
Business Enterprise in Mettu town.
 To evaluate whether there is any government’s rules and regulation that
affects directly to re-operation of Small Business Enterprise in Mettu town.
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1.4. Significance of study
The findings of this particular study was useful for the government to make policy on
the small enterprise establishment in the country, also to some extent useful for the
local people to establish small business enterprises in the town that was not only
provide employment opportunities but also significantly increase the income of
stakeholders. It gives a clue of the share sectors in improved the income level of the
poor and in narrowed the income gap and also to reduce unemployment in the area of
the study and this would have presented the benefits of sectors to the concerned
government bodies proved credit, provided clear and better banking facilities, it helps
to identify the problems that face small business in Mettu town and propose the
problems to the government and other concerned bodies to search for solutions, it
gives suggestions and recommendation for those who are engage in the growth and
expansion small business enterprise and how they could solve minor problems on the
declining themselves, it serves as a bench mark for further researches that would have
been done on this area in the near feature, and it also provide constructive suggestions
and recommendations for decision makers such as, government and businessmen.
1.5. Scope of the study
The scope of this study was limited on the factor affecting the growth and expansion
of Small Business Enterprises with the particular area of Mettu town.
1.6. Limitation of the study
The study was based on own (candidate) source of finance to partial fulfillment of
award of Bachelor of Arts degree in economics. The finding of the study was limited
in its sphere because of many limitations like financial constraints, lack of time to
collect organize and analyze the data, respondents unwillingness to give the correct
information and lack of experience to some extent by the researcher.
1.7. Organization of the study
The study was organized into five principal chapters; the first chapter was deals with
introduction part compromising statement of the problem, objectives, research
questions, significance of the study, scope and limitation of the studies. The second
chapter covers the theoretical as well as empirical literature reviews. However, the
third chapter focuses on the methodology of the studies which contains description of
the study area, source of data, method of data collection, sampling technique and
6
sample size and data analysis and interpretation. The fourth chapter deals with data
analysis and interpretation. And finally fifth chapter makes conclusion and
recommendation (some preliminary suggestions) based up on findings.
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CHAPTER TWO
2. LITERATURE REVIEW
2.1. Theoretical Review
2.1.1. Definition of Small Business Enterprise
In Ethiopia context the definition of Small Business Enterprise is given as small
business found in all sectors of the economy, with paid up capital not more than
20,000birr excluding high technological consultancy and other high technological
establishment while small business enterprise are a business enterprise with paid up
capital not more than 50,000birr and including high technological establishment.
Specifying any standard to define the size of Small Business Enterprise is necessary
because people will adopt different standards for different purpose. For example
legislators may exclude small firms from the accretions regulation and specify 10
employs as the cutoff point. More over a business maybe described as small when
compared to large firms, but “large” when compared to small one for example most of
people will classify independently owned retails of the store as small business and
micro business (MOTI, 2008). Theories developed to explain the growth of large
companies are not adapted to explain the phenomenon in small companies, but growth
is important for the survival of small businesses .This theoretical article aimed to
identify the understandings of the phenomena of the growth of small companies
presented in the literature and the perspectives of future studies.
The Small Business Enterprise firms are contribute the aggregates of current
economy, and their successfully operation has essential on the economic wealth of the
nations. The Small Business Enterprise is a major factor of economic integration in all
developing countries. In many countries, the governments agencies are accept the
contribution of these enterprises to the creation of the job opportunities and to the
alleviation of vicious circle of poverty. They have been given priority in many
development plans as a strategies of money donors (Mead et.al 2007).The Small
Business Enterprises is independently owned and managed by the owners statically,
these businesses are employees less than 500 workers (Haile Hagos, 2008).
According to Hailey, (2003) Small Business Enterprise covers a wide spectrum of
industries and plays an important role in both developed and developing countries.
Ethiopia is no exception and Small Business Enterprise occupies a prominent position
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in the development of the Ethiopian economy, over the numbers of small business
alter to rise from time to time, the Small Business Enterprises may be three ways;
•
Family enterprise: are locally owned and operated often by person called sole
proprietorship.
Proprietors may have started their business in an effort to supplement or to
replace family income. The family owned businesses are very widely and can
inclined retail stores, contracting business small manufacturing firms and
restaurants among others. In the absence of succession is unlikely unless as on
or volunteer develops comparable skill.
•
Personal service: producing enterprise that share common name, use common
material and sell similar products and services. The franchise may reeve financial
helps, training, graduated supply project market and technical assistance with
matter such as site selection purchasing, accounting and operation management.
•
Firmer and franchised: are created by contacts. An individual receives specific
help and advantage in exchange for franchise fee and usually a percentage of
sales. The individual who buys a franchiser is called franchise or developed and
owners or income producing enterprises. That shares the common name, use
common materials and similar product and services.
In Ethiopian the Small Business Enterprises are defined by the Development Bank of
Ethiopia(DBE) the total investment cost including working capital is between birr
600000 up to 700000. The term Small Business Enterprise refers to the establishment
that employee six up to fifteen workers (Haile Hagos, 2008). In Small Business
Enterprise development in Ethiopia, Ministry of Finance and Economic Development
(MOFED) define this term as Small Business Enterprises are that independently owned,
approved and managed the business activities. Ethiopia is a country where a large
proportion of the population lives in vicious circle of poverty, and the Small Businesses
have largest creation of job opportunities in the economy. These business have provide
substation to the economic in providing new job opportunities, introducing innovation
stimulate computation, producing goods and services effectively. In most developed
countries, the contribution of Small Business Enterprise is to generating employment
10
opportunity and poverty reduction appears from time to time Ministry of Finance and
Economic Development (MOFED, 2012).
The Small Business Enterprises are essential for the growth economy to success large
corporations and to promote sustainable development in all countries. The Small
Business Enterprises are examined in terms of the many services, local professional
practice and merchandises that all of us rely on, for instance shoe store, convenience
store, laundries, gestation and other enterprises. The economy of the countries cannot
function without the business activities (David Holte 2010).
2.1.2 Importance of Small Business Enterprise
According to Dr.v.Balu (2013) in developing country especially in Ethiopia, labor is
abundant and capital is scarce in Small Businesses which occupy the significant position
in providing employment opportunities and increase capital, formation in the countries.
The following are some of the importance of Small business enterprise.
•
Employment potential: The Small Business Enterprise creates more job
opportunities per unit of capital employed. It is the element, that leaving as
idea highly capital intensive industries involving up economic and social
infrastructure facilities, that help men-largamente of job opportunities.
•
Distribution of income: The income is generated in few large enterprises and
benefits the Small Business Enterprises. The large enterprise distributes
income to large segment of populations.
•
Utilization of local’s resources: The Small Business Enterprises are able to
top talent resources like entrepreneur ability to manage the wealth. They
enlarge the growth of class of small business enterprises that introduces a
dynamic element in the economy.
•
Foreign exchange earnings: Small Business Enterprises facilitate substances
foreign exchange saving and earnings. A wide variety of consumer and simple
producer goods can be produced economically on business enterprises.
11
•
For Economic Development: The Small Business Enterprises are important
to develop the economic growth of thke nation by developing the living hood
of the citizens of that nation.
The Small Business Enterprises are widely recognized for their role in the social,
political and economic development particularly apparent in its ability to provide
reasonably priced goods and services, generating income and create employment
opportunities for people (Kauffmann, 2008). The SBEs are important not only for
individual person but also for the whole nations. For the individual it provides
employment and raise the standard of living of both employers and employees and
complement large scale modern sector enterprises, utilize agricultural and other raw
materials that would have gone to waste, serve as limited or closed markets that
warrant only small scale production, mobilize resources otherwise left out of the
mainstream formal mobilization channels and they provide the necessary platform for
take-off into large scale modern production for the nation (Bwisa 2011).
The Small Business Enterprises are the main source of employment opportunities in
developed and developing countries comprising over 90% of African business
operations and contributing over 50% of African employment opportunities and GDP
(Okafor, 2006). The United Republic of Tanzania (URT), like any other developing
countries, has taken a number of measures to promote the growth of private sector and
Small Business Enterprises (SBEs). In Tanzania, SBEs were estimated to account for
a significant share of Gross Domestic Product (GDP) of more than 30% (IPP Media,
2012) For the purposes of protect and control the operation of SBEs in Tanzania,
Government of Tanzania imposes several types of taxes which aim in protecting
home/infant industries (protectionism) and ensure fair competition among SBEs
(Oludele et.al, 2012).
2.1.3. Problems of Small Business Enterprise
Before starting small business the owner of the business should consider with the
product lines well adequate on the new culture. They will sell in quantities large
enough and at price high enough to be profit tables as well the owner should analyze
the components of product to determine what features need to be adopted to ensure
that the product meet both perceived quality and perform quantities. Large number of
small firms they do not think for making modification. But what is gaining good
12
profit for them is doing things better though differentiating their product from other
competitors. If not they adopt product and service already present in the market their
selling volume and attracting new customer become less. Most small business is
characterized by awareness of product modification (Rogerson C. M. 2000).
Ministry of Trade and Industry of Ethiopia (MOTAI 2010) reported that most SBEs
face a critical constraint both in operation and at start up level. Some of the
constraints are as follows;•
Lack of access to capital and credit: lack of adequate investment capital,
lack of sufficient loan, and inefficient financial market in terms of
facilitating financial resources to SBEs are the major obstacles in doing
businesses, particularly in informal sectors. Most SBEs are highly risky
ventures involving excessive administrative cost and lack of experience in
dealing with financial institutions are reluctant to provide small enterprises
with loan and credits, most SBEs are unable to secure collateral
requirements.
•
Tax:-The tax system of any government is general the product of its own
environment. Government has a right to impose taxes on the operating
business and collect the tax revenue from them. The tax collect from the
operating business has a great important for raising revenue for government.
But payments of the tax for the small business are mostly not balanced with
their activities. At present the tax system for the small business is among the
most factors that discourager’s the development of small business. So
taxation is the server problems in small business. Before starting Small
business is among the most factors that discourager’s the development of
small business. So taxation is the serious problem is small business. So
taxation is the server problems in small business.
•
Socio-cultural challenges: These are challenges such as lack of enterprises
culture in the economy, excessive corruption; which actually constrain
private enterprises.
•
Lack of clear and pragmatic national policy to enhance the development
of SBEs: Despite the strategies mentioned under national strategy for SBEs
expansion, most interventionist policies regarding SBEs are inappropriate
13
and unrealistic. For instance, most government policy have a tendency to
over regulate and limit the growth of private sector enterprises and they are
over bureaucratized and unfriendly to support small businesses.
•
Lack of formal or informal linkages or business cooperation among
enterprises: the other factor that hinders growth and expansion of SBEs is
the effectiveness with which they interact with large or similar firms. In
other words, formal or informal linkages or connection through networking
are not common. The legal and institutional mechanisms to enforce
contractual obligation and government policy to design appropriate incentive
mechanisms to encourage the expansion of business linkage is at its infant
stage.
•
Accessibility of training problems: Training is mainly concentrate on skill,
marketing, financial management entrepreneurships and how to use
technologies in the enterprises. The respondents were asked whether they
trained before coming to this job or directly joined and responded that most
of them haven’t trained.
According Konjit D. (2017), The Small Business Enterprise faces many problems in
the area of their operation and production, and these are as follows;•
Shortage of raw material:-The procurement of raw material of required
quality at competitive price is the most severe problem faced by this sector.
Though the institutional arrangement in this regard is to exist the allocation
mechanism often works against the interest of these sectors. This is more
pronounced in the case of scarce raw materials that have been imported.
Beside frequent interruptions in the availability of essential raw material
prevents fuller economy utilizations of productive capacity of small units.
•
Inadequate finance: - Most of the Small Business Enterprises depend on
external finance or non-institutional financial assistances by the various
agencies, like financial corporations and commercial banks, often tells much
short of their requirements. Finance is the base point for any business
activities lack of adequate finance has always been major problem of Ethiopia
small business, since small business do not have easily access to the capital
14
market because of the organized on proprietary basis and very small in size
and their supplies which can be utilized to loan are legible small forms are not
public company’s his means they often have rising of the problems.
•
Lack of sufficient marketing and promotional support: There are no
sufficient institutional facilities that help the promotion, growth, and
development of SBEs. Marketing their product effectively as well as
accessing and acquiring information on business opportunities is the major
bottlenecks that SBEs faces all over the country. As a result, the design and
quality of products of SBEs are below standards.
2.1.4. Contribution of Small Business Enterprise in Ethiopia
As a part of business community small firms unquestionably contribute to our
national economic welfare. They provide new jobs, introduce innovation, bag aid
business, stimulate competition and produce goods and services efficiently (Haily,
2003).
•
Provide new jobs: as the population grows, small business provides new jobs
opportunity. It seems clear jobs, sometimes adding job, while large
corporations are “Down size” and laying of employs (Halftone Aregawi,
2011).
•
Introducing innovation: new predict that or ignited in the search laboratory
of big business in achieving the truly significant innovations. The record
shows that many scientific betakes through originated with independent
investors and small organization. The studies of innovation have shown the
greater effectiveness of small firms in research development. Innovation has
contributed to productivity by providing better products and better methods of
production.
•
Producing goods and services efficiently: The commonsense SBEs are tells
us that efficient size of business varies with industries. The continued
existence of small business competitive economic system is in itself evidence
of small business operations. If small firms are hopeless and inefficient, they
will make no use full contribution. We believe that small business contribution
in substantial way to the economic welfare of our society (Tegegne G.Eg.
et.al, 2016).
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2.2 Empirical Literature Review
The growth of Small Business Enterprises is an important phenomenon in small
enterprises. In fact, the survival of Small Business Enterprises essentially depends on
their power to participate in the market. The growth of the Small Business Enterprises
motivated other entrepreneurs to start businesses. The strengthening is important not
merely for the enterprises and their owners but for all stakeholders since these
companies thrust forward the economy by underscoring diversity of products and
services (Rauch et.al, 2013.
Dajane, (2009) cited that, the growth phenomenon of small enterprises had been
widely analyzed within entrepreneurship; one motive is that most fail to expand
during their life span and small businesses refrain from growing According to Head
et.al (2009) the growth many Small Businesses Enterprises are very fast and others
are slow growths, and most of the enterprises are not achieved their goal because of
managerial skills.
The complex phenomenon of growth of Small Business Enterprises requires further
research since several studies have been developed to measure growth the
companies’. Achtenhagen et al. (2010) reviewed studies on the growth which was
published between 1997 and 2008 and identified 56 articles, most of which
endeavored to explain why enterprises need to grow (growth as a dependent variable);
however, other articles dealt with growth strategies or on growth intentions and
desires. The Explications on the growth or no growth decisions, contextual
dimensions, the role of entrepreneurship agency are still lacking (Wright et.al, 2012).
The need for further studies may be justified due to the fact that theories developed to
explain the growth of big enterprises are not adapted to foreground the same
phenomenon in small ones and the debate on the theme is still on and reaches several
directions encroaching on growth indexes, growth determinants, impairments, and
explication models. Moreover, they develop the explanations on the manner
entrepreneurs take decisions to further or not their companies´ growth (Davidsson et
al., 2010).
Bhatia et.al (2003),
define growth of Small Business Enterprises as “geographical
expansion, increase in the number of branches, inclusion of new markets and clients,
increase in the number of products and services, fusions and acquisitions”. According
16
to these authors, growth is above all a consequence of certain dynamics built by the
entrepreneurs to construct and reconstruct constantly, based on the assessment made
on their firms and on the market. The entrepreneurs are not the sole vectors since
there are many other agents involved, such as clients, kin, suppliers and others. In
fact, growth is a “socially constructed factor.
According to Swierczek, F. et.al (2003) frontier progress in the milieu or expansion is
the product of a constant dynamism since growth intentions change as a result of
constant evaluations and re-evaluations that entrepreneurs make as agents. It may
result in the displacement of the firm to another place and in fixing itself in the same
place. It is the “growth dilemma” full of risks. However, the difficulty in analyzing
the firm´s growth at the precise moment should be underscored. It is easier to
investigate the antecedent factors that affect growth and the consequences of growth
and more difficult to investigate growth dynamics or the manner growth firms.
As Ephrem (2010) indicated the SBEs are contributing a lot for poverty alleviation
but they are facing multi-dimensional problems both at start up and operational levels.
Considering the main problems of the enterprises in different sectors this researcher
reveals that, startup capital, high interest rates, skilled personnel, production place,
unaffordable tax and /or rent, inadequate support from Government/NGO, working
capital or lack of credit facilities, lack of access for training were among the major
impediments for operator/manager at the grass root level of SBEs activities. This
study also revealed that the severity of SBEs problem is varying depending on the
type of sectors i.e. Problems in one sector are different from the other.
In Oromia Region, the SBE sectors have high capacity in absorbing labor force;
because this sector is characterized by diversified activities. Due to its contribution for
alleviating the vicious circle of poverty of the low income people and of course with a
number of constraints Small Business Enterprises get the attention of many
researchers. According to Daniel (2017) with having an objective to assess the impact
of group-based SBEs on poverty alleviation conducted a research in Mettu town of the
Oromia Regional State of Ethiopia. According to this study, 48% of the surveyed
respondents are of a view that their income has increased while 22.7 % said that their
income has decreased as a result of their engagement in the studied SBEs. The study
further indicated that the studied respondents consumption expenditure has increased
17
after they start to work in SBEs, which has resulted in the improvement of the
operators consumption and ownership of water, housing, household assets, education
and medication. The same study showed that SBEs have a protective role on averting
vulnerability of their members to risks such as food shortage, unemployment and lack
of income. Most importantly, the research pointed out that SBEs have helped for the
economic empowerment of many owners of Small Business Enterprises.
As many authors were mentioned in above theoretical and empirical literature, the
factor affecting the growth and expansion of Small Business Enterprises like Sociocultural challenges, Lack of formal or informal linkages or business cooperation
among enterprises, Lack of sufficient marketing and promotional support,
Accessibility of training problems and raw material shortage etc. In addition to this
there are some other factor that affects the growth and expansion of Small Business
Enterprise like Lack of market, poor managerial skills and inadequate finance etc.
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CHAPTER THREE
3. Research Methodologies
3.1 Description of the study area
The study was conducted in Oromia regional state Illubabor zone at Mettu town.
Mettu town is a market town which has separate woreda along Sor River, located in
southwestern part of Ethiopia at the distance of 600kms from the capital city of
Ethiopia, Addis Ababa. Mettu is capital city of Illubaora zone which was established
in 1905. It’s bordered on the south by Becho woreda, on the southwest by Bure, on
the west by the Ale woreda, on the north by the Nopha woreda, on the east by
Hurumu woreda. The average annual rainfall of this town is 1701mm. The average
annual temperature is 19.90c. Its astronomical location is 8º 31’11’’ North Latitude
and 29º 57’ 41’’ East Longitude. Mettu has been an important market of the coffee
trade, with several foreigners residing town as early as the 1930s to buy the crops
from local farmers. At this early date, the town was connected by telephone to Gore
and Addis Ababa. The city also has a high school and hospital. Mettu is one of the
reform towns in the region and has a town administration, Municipality and three
kebeles. Mettu town has total population of 102,074 of whom 50,852 are men and
51,222 are women. The total area of land in this town is 68,723 hectare (Mettu
administration office, 2019).
3.2. Sources and types of data
The study was based on both primary and secondary sources of data. The primary
sources of data include the actual information from concerned respondent and to be
collected through well-design questionnaires and interviews. However, the secondary
sources of data includes all types of published materials like Scientific Journals,
Articles and Research Papers, and also to some extent un-published materials on
Small Business Enterprise.
3.3. Methods of data collection
The primary data was collected by using interviews and questionnaire. Interview
question was needed because some respondents who was taken as a sample may not
able to read and write and to avoid false information and carelessness that may arise
during filling the questionnaires. The secondary data was given a place in order to
19
strengthen the information required and proposed necessary suggestions for the
problem. The questions were comprised both Open-ended and Close-ended questions.
3.4. Sampling techniques and sample size
Totally Mettu town have three kebeles of Small Business Enterprises. Those three
kebeles have 856 SBEs. Therefore, from those three kebeles the researcher was taken
one kebeles to conduct out of three purposively. Because of budget constraint,
location of these kebele and most SBEs are found in these kebele the researcher was
limited the study area on 03 kebele. In 03 kebele there were 196 SBEs and 573 are
employee work in those SBEs. From those 331 are male and 242 are female. The
techniques that the researcher used in this research were random probability methods
of sample technique.
To determine the sample size, the researcher was used a simplified formula that was
provides by Yamane (1967)
n=N/1+N (e)2
Where
n= sample size
N= total population and
e = sample error
N=196
To take a 10%, degree level of significance=0.1 and 90% confidence level
n=N/1+N (e) 2
=196/1+196(0.1)2
=196/1+196(0.01)
= 196/2.96
=66.215 ~66 SBEs
In the above formula the researcher used 10% for the value of “e” which is the error
term because the total population is very large and so helps to minimize sampling
20
error. Then how much sample was taken from each business was calculated as
follows. The total number of each SBEs and the amount of sample from each
enterprise are listed below. Service sector (83), trade sector (65), manufacturing sector
(22) construction (16) and urban agriculture sectors are (10). The sample from each
was taken by the following stratified sampling formula.
Pi=
Where:
Pi is the probability of each enterprise to be selected,
Ni is the total number of each enterprise and
N is total observation.
P1==83/196=0.42
P2==65/196=0.33
P3==22/196=0.11
P4==16/196= 0.08and
P5==10/196=0.05
Where p1, p2, p3, p4 and p5 are probability of each enterprise which was selected and
N1, N2, N3, N4 and N5 are number of each enterprise and finally N is total number of
enterprises or observation. Then the number of each enterprise is calculated as follows
by using stratified sampling formula.
n=pi x N
Service=0.43X66 =28.38
Trade=0.33X66 =21.78
Manufacturing =0.11X66 =7.26
Construction=0.08X66 =5.28 and
Urban agriculture=0.05X66 =3.3
Total=28.38+21.78+7.26+5.28+3.3 =66
21
Where n is sample of each enterprise, pi is the probability of each enterprise and N is
sample size The reason why stratified method of sampling has been used due to high
population and heterogeneity in various aspects, and to include such large number of
Small Business Enterprises in the probability of selection and make it more
homogeneous, they have to be sub divided in to their respective groups, strata, and
then simple random or lottery method of sampling technique was applied for each sub
groups to obtain the representatives from each group. Therefore, this method was
unique to generalize the factors affecting the growth and expansion of Small
Businesses Enterprises in Mettu town.
To calculate how many SBEs represents each one of the elements of the sample
researcher make the other quotient, by dividing the number of elements of population
to the number of elements of the sample. To conduct those selected samples
researcher was used the following formula.
K= N/n
Where N =Number of population
n=Number of selected samples
K= Element of sample represent
=196/66
=2.969~ 3
3.5. Methods of data analysis
The collected data was analyzed by using both quantitative and qualitative
descriptions, descriptive analysis and statistical inferences which use to allow
describing, summarizing and presenting the qualitative data. In addition, the collected
data was edited, classified and errors was omitted and examine in a correct manner,
and after the relevant data collected
was processed an analyzed with the ratio,
percentage and tabulation which are important for transferring the raw data in to a
form that makes them easy to understand and analysis.
22
CHAPTER FOUR
4. DATA ANALYSIS AND INTERPRETATION
4.1. Description
This chapter focused on the data analysis and discussion of the data collected from the
primary and secondary sources. The primary data was collected from the respondents
of the Mettu town and which are 66 in number and used interview and questioner
methods for its collection. The secondary data analyzed and presented below was
collected from the various documents in the form of published and unpublished
materials. The data that was acquired from respondents were completed and returned
and the results of the questionnaires were described as follows.
4.1.1
Personal Information about Respondent.
Table4.1.1. Background of the respondents
N
o D e s c r i p t i o n No of respondents
1
4
2 6
7
%
Female
2
4 3
3
%
6
6
1 8 - 2 5
3
2 4
8
%
e 2 6 - 3 5
1
9 2
8
%
3 5 - 5 5
1
1 1
6
%
e
x
T
o
t
a
2
g
>
T
o
t
Households size
o
l
5
t
5
4
1
0
0
8
%
%
6
6 1
1 - 3
2
1 3
2
%
4 - 6
2
6 3
9
%
>
7
1
9 2
9
%
l
6
6 1
a
3
T
p e r c e n t
M a l e
S
A
I n
l
a
23
0
0
0
0
%
%
4
Educational level
Grade 1-4
2
1 3
2
%
Grade 5-12
2
8 4
2
%
Certificate
1
1 1
7
%
Degree
T
o
t
Marital status
T
o
t
9
%
6
6 1
Married
2
4 3
6
%
Unmarried
2
9 4
4
%
a
5
6
l
Widow
6
9
Divorce
7
1
a
l
6
6 1
0
0
%
%
1
0
%
0
%
Source: own survey 2019
As indicated in the above table 4.1. The majority of respondents 67% are males and
remain 33% are females and consequently males are highly participating in the
business activities and they contributed more for development/ growth in Mettu town.
Age structure: as it is shown in the above table that 48% of respondents are the age
group of 18 and 25 years and 28% of respondents are between the age of 26 and 35
years. However, 16%of participates are the age group of 36 and 55 years and the
remaining 8% respondents are aged greater than 55 years. This shows that most of
the small business that contribute for the growth and expansion of Mettu town by
involving in different economic activities are the aged between 18 and 25 years,
followed by the age between 26 and 35 years.
Household size: the above table shows 32% of respondents have the household size
between 4 and 6 39%of respondents are between the size 1 and 3 and also the
remaining size greater than 7 sizes were 29%. This shows that the majority the
small business 4 to 6 grater 7 have contribute growth and expansion Mettu town.
Education level: table 4.1.The Small business Enterprises offer great job opportunity
only educates level. When we see education status, the majority of respondents
24
42% have education level from grade level 5th -12, there participants grade 1-4th
was accounts 32% participate in small business enterprises. And also another
education of certificate level accounts 17% participants in growth Small Business
Enterprises. The remaining 9% are participants who have degree and no
participant of respondents of respondent in illiterate. The survey result should the
most of participant are 5th -12th educational level which accounts 42%.
Marital status: based on the above table, 44% of sample respondents involved in the
survey were unmarried and also 36% respondents involved married.
The remaining 9% of sample respondents were widow. And the end sample
respondents were 11% divorced. This implies that most of unmarried respondents are
contribute more the growth in Mettu town divorced respondents by generating their
business activity and by creating job opportunity for others.
4.1. 2. Response on the Type of Business that Respondents are Running
Table4.1.2. Response on the type of business that respondents are running
Type of Businesses that respondents are running
Number of respondents
M a n u f a c t u r i n g
7
T
r
a
d
e
2
I n
p e r c e n t
1
1
%
2 3
3
%
C o n s t r i c t i o n
5
8
%
Urban agriculture
4
6
%
S e r v i c e
T
o
t
s e c t o r
a
l
2
8 4
6
6 1
2
0
%
0
%
Source: own survey of 2019
The assessment that made on the number and type of business that respondents are
currently running is shown in the above table. The majorities of the respondents
which responded are engaged in service sector activities which constitute42%, Trade
is another business type which constitutes 33%, manufacturing 11% next to trade.
The remaining constriction 8%, urban agriculture 6% are running the businesses.
25
4.1.3 Income before Gaining the Small Business Enterprises.
Table4.1.3.Distribution of respondents by their benefit they have
(increase income) benefit before they engaged Small Business.
Monthly income before gaining business
No of respondents I n p e r c e n t
0
0
1
2 1
8
%
-
1
5
1
5
1
-
3
0
0
1
1 1
7
%
3
0
1
-
4
5
0
1
5 2
3
%
4
5
1
-
6
0
0
1
2 1
8
%
6
0
1
-
7
6
0
1
6 2
4
%
6
6 1
T
o
t
a
l
0
Source: own survey 2019
As the above table shows that monthly income before gain in to small business 18%
of respondents have indicate 0-150 and 17% of respondents are 151-300 monthly
income, 23% of respondents are 301-450 monthly income, 18% of respondents are
451-600 monthly before income. And the end sample respondents 24% were 601-760
monthly income.
4.1.4 Income after Gaining the Small Business Enterprises.
Table4.1.4.Distribution of respondents benefit after they engaged Small Business.
Monthly income after gaining the business
1
5
0
-
3
0
0
3
0
1
-
4
5
0
4
5
1
-
7
6
7
1
6
2
1
0
1
1
-
2
1
5
No of respondents
1
2
%
1
2 1
8
%
0
1
5 2
3
%
0
0
1
4 2
1
%
0
0
1
7 2
6
%
26
8
In Percent
0
%
T
o
t
a
l
6
6 1 0 0 %
And also income after gain the business 12% of respondents have the income of 150300 and 18% of respondents are 301-450 monthly income and also 23% of
respondents are 451-760 monthly income. The remaining 21% of respondents are
761-1200 monthly after income and the end sample respondents 26% were 1201-1500
after monthly income.
4.1.5. Motivation to Start the Small Business Enterprises
Table 4.1.5.Whatare the factors that motivate you to start a business in Mettu
town?
Motivation factors
No of respondents
Market opportunity
2
9 4
4
%
Availability of raw materials
2
0 3
0
%
Government encouragement
1
7 2
6
%
Only for moral satisfaction
T
o
t
a
l
0
6
In Percentage
0
6 1
%
0
0
%
Source: own survey 2019
The above table shows the number of respondents and their relative percentage for
motivation factors to start business in Mettu town. From the table we can see that
about 44% of the respondents have started business by looking market opportunity
while 30% from sample total population have started their business by availability of
raw materials about 26% of respondents started their business by government
encouragement.
From the above information the researcher concluded that the major factors that
motivates the business man to start up business in Mettu town’s the existence of
market opportunity.
27
4.1.6 Initial Capital to Start Small Business Enterprises
Table4.1.6. Initial capital to start up the Business in Mettu town:
What is your initial capital to start up business in Mettu town
1 0 0 1 - 5 0 0 0
B i r r
5 0 0 1 - 1 0 0 0 0
B i r r
1 0 0 0 1 - 2 0 0 0 0
Number of respondents
1
4
%
1
6 2
4
%
B i r r
2
2 3
3
%
2 0 0 0 1 - 3 0 0 0 0
B i r r
1
1 1
7
%
>
i
1
2
%
3
0
T
o
0
0
0
B
t
a
r
9
In percentage
r
8
6
l
6 1
0
0
%
Source: own survey 2019
From the above table, all respondents responded that 14% of the sample respondents
involved in survey was 1001-5000 Birr and also 24% respondents involved 500110000 Birr. And also 33% of the sample respondents were 10001-20000Birr the
remaining 17% participate of respondents were 20001-3000 Birr. The end sample
respondents were 12% was greater than 30000 Birr.
4.1.7 The Sources of capital to start Small Business Enterprises
Table4.1.7. The sources of capital to start the business.
The sources of capital to start business
Number of respondents
H o u s e h o l d
3
1 4
7
%
2
9 4
4
%
L o a n
t h e
b a n k
M o r t g a g e
o f
l a n d
T
a
o
f r o m
i n c o m e
t
6
6
l
In percent
9
%
6 1 0 0 %
Sources: own survey 2019
As the above table shows, household income is the largest sources of capital to start
up the businesses which account about 47%, loan from the bank about 44% and
mortgage of land about 9% are sources of capital to start the business in Mettu town.
28
4.1.8 Amount of birr Required to Start the Small Business Enterprises
Table4.1.8. Current capital growth and expansion of small business Enterprises
How much amount of capital required starting up a business at current time?
Number of respondents
<
r
1
3 2
0
%
r
1
7 2
5
%
1 0 0 0 1 - 2 5 0 0 0 B i r r
1
2 1
9
%
2 6 0 0 1 - 5 0 0 0 0 B i r r
1
7 2
5
%
1
1
%
5
>
T
5
0
0
0
5
0
0
o
0
-
0
1
0
0
0
B
0
0
t
i
0
r
B
B
i
i
a
r
r
r
7
6
l
In percentage
6 1
0
0
%
Source: own survey 2019
Based on the table the 20% of sample respondents involved in the survey were
<5000Birr and also 25% respondents involves 5000-10000 Birr. The remaining 19%
of sample respondents were 10001-25000Birr and also 25% of participants of
respondents were 11% was >50000Birr. This implies the most of 5000-10000Birr
respondents are contribute more growth in Mettu Town.
4.1.9. Government Support to Start Small Business Enterprises
Table4.9. Government support for small business in Mettu town:
Is there any government support in your business?
Number of respondents
Y
e
3
1 4
7
%
N
o
3
9 5
3
%
6
6 1 0 0 %
c r e d i t
2
9 4
4
%
By providing cheap and better banking facilities.
3
7 5
6
%
T
o
t
s
a
l
In percent
What type of support does the government provides for your business?
P r o v i d i n g
29
T
o
t
a
6
l
6 1 0 0 %
Source: own survey 2019
As it can be seen from the above table, from the total population 47% of respondents
responded the government supported their business running remaining 53% is
accounted for those respondents who responded that government does not support
their business. Some respondents were also asked what types of support do the
government provide to them some of these replied that the government rendered them
support to encouragement of the sector to start the business by providing credit and
44% providing cheap and better banking facilities 56%. From these the researcher can
understand that the support of the government towards the sector is less. This would
also affect their development.
4.1.10. Effect of Government Policies on Small Business Enterprises.
Table4.10. Effects of government action on the activities of small business
enterprise:
Is there government influence on the activities of your business?
Number of respondents
Y
e
3
7 5
6
%
N
o
2
9 4
4
%
l
6
6 1
Bureaucratic process to get license
1
8 2
7
%
Increase in tax mandatory
2
6 3
9
%
Requirement of individuals to form one group to get loan
1
5 2
3
%
1
1
%
T
o
s
t
a
In percentage
0
0
%
What type of government activities that influence the businesses?
O t h e r
T
o
a s s i s t a n c e
t
a
l
7
6
Source: own survey 2019
30
6 1
0
0
%
Based on the above table, 56% of the respondents said the government activity
influences their business and 44% of their respondents responded that there are no
government activities which affect their operation. The respondents are also asked to
mention some of the problems and they cited the problems such as bureaucratic
process to get license, increase in tax, and the mandatory requirement of individuals
to form one group to get loan and other assistance also affects their operation as each
individual has different behavior, interest, and working capacity.
From these the researcher concluded that the nature of government policy is also one
of the determinant factors the success of small business enterprise in Mettu town.
Despite that, the affecting factors of small business enterprise have much considerable
importance if impediments which affect the smooth operation of the sector be
determined.
4.1.11. Management of the Small Business Enterprises
Table4.1.11. Response on how the respondent businesses are managed
How do you manage your businesses?
Number of respondents
By individual who have managerial skill.
1
5 2
3
%
By individual who do not have Managerial skill
2
0 3
0
%
Y
3
1 4
7
%
6
6 1 0 0 %
T
o
u
o
r
s
t
e
a
l
f
l
In percent
Source: own survey 2019
As shown on the above table 23% of the total respondents businesses are managed by
an individual who does not have managerial skill and only 30% of the respondent’s
business enterprises are managed by individual who have the required managerial
skills and another one is yourself 47% of the respondents. From this the researcher
concluded that the absence of managerial skill is one of the affecting factors that
challenge growth and expansion of small business enterprise Mettu town.
31
4.1.12. Indirect Problem of Small Business Enterprises
Table4.1.12. The problems that indirectly affects the growth and expansion of
the Small Business Enterprises.
What are the problem indirectly affect your business?
Number of respondent
Misallocation of resources
2
9 4
Failure to resource conflicts between workers
failure to know the internal strength and weakness
6
o
t
a
9
6
l
4
%
2 3
4
%
1
3
%
6 1
0
Source: own survey 2019
The above table shows the problem indirectly affect the business like
44%
misallocation of resources, 9% failure to resource conflicts between workers,
34%failure to know the internal strength and weakness and
13%external
opportunities and threat of business etc. which restricts the growth and expansion of
Small Business Enterprises indirectly.
4.1.13. Factors Affecting Directly the Small Business Enterprises
Table4.1.13. Factors affecting the growth and expansion of Small Business
Enterprise in Mettu town
What are the factors affecting directly the growth and expansion of the businesses
Number of respondents
F i n a n c i a l
1
p r o b l e m
In percentage
6 2
4
%
Shortage of raw material
9
1
4
%
Lack of government support
8
1
2
%
Lack of marketing facilities
7
1
1
%
32
%
9
2
External opportunities and threat of business
T
In percent
0
%
Lack of infrastructure
6
9
Lack of managerial skill
2
0 3
Total
6
6
%
0
1
0
%
0
%
Source: own survey 2019
Based on the above table show the factors affecting the growth and expansion of
Small Business Enterprises are financial problems which accounts 24%followed by
shortage of raw material which accounts 14% and also lack of government support
12%, lack of infrastructure which accounts 9% and the remaining 11% are lack of
marketing facilities and the most problems are lack of managerial skill to manage the
businesses which accounts 30%.
4.1.14. Growth and Expansion of Small Business Enterprise.
Table4.1.14. The Growth and Expansion of Small Business Enterprise
Growth status
I t e m
Respondents In number
What is the current poison of your business?
On growing
3
8 5
8
%
1
3
%
1
9 2
9
%
6
6 1
On declining
Stagnant
T
o
t
a
l
In percent
9
0
0
%
Source: own survey 2019
As the table indicates most of enterprise owners from the respondents 58% were
replied that their business is on growing and 29% were respond that their business is
stagnant. The remain 13% of respondents business position is on declining due to
mismanagement of their business position is on declining due to mismanagement of
their business and the existence. Generally the data individuals that, most of
enterprises are growing from time to time and some other are have stagnant growth
position and also few enterprises faced on declining in their business activity. Most of
enterprises were established for maximizing their return and growth their business.
Besides there can be satisfies their customer. The owner of the business can supply
their goods and services for community, government officials and other enterprises.
33
4.1.15. Supply of the Product
Table4.1.15. Customers of Small Business Enterprise
For whom you supply your products?
Respondent in number
C
y
4
8 7
3
%
o f f i c i a l s
1
0 1
5
%
1
2
%
o
m
m
u
G o v e r n m e n t
n
i
t
Other business enterprises
T
o
t
a
8
6
l
In percent
6 1 0 0 %
Source: own survey 2019
As the data shows in the above chart one most of enterprise product is that of 73% is
consumes by community and 15% of small businesses product purchased by
government officials and the remaining 12% of small business product is purchased
by other enterprises for their consumption purpose or further production purpose.
Generally, most of enterprises product is used by community which implies that many
consumers of small business product are giving community based services because
the materials that is produced or delivered by small business based on the capacity of
community purchasing power.
4.1.16. Nature of Competition in Small Business Enterprise
Table4.1.16. Competitions among the business
Is there any competition prevailing in your businesses?
Y
e
N
T
o
t
a
Number of respondents
In percentage
s 4
8 7
3
%
o 1
8 2
7
%
l 6
6 1
0
0
%
Sources: own survey 2019
The table shows the response of the respondents on the natural of computation. As
stated in the above table 73% of Small Business Enterprise responded that their
business face several competitions on the market and only 27% of the entrepreneurs
are free from competition. Based on the above response provided the researcher
concluded that there is high competition between business enterprises which accounts
34
73% of total respondents and it is one of the factors that affecting their growth and
expansion. This is because one of the problems of business enterprise facing unequal
competition excreted from other large companies venturing. In the same business and
market backed by strong financial sources, economics of scale and aggressive
marketing. This firm can easily kick the owner of Small Business Enterprises out of
the market.
4.1.17. Nature of Promotion to the Small Business Enterprises
4.1.17. The promotional activities of the product
Is there any promotional activity in your business?
Number of respondents
Y
1
9 2
9
%
4
7 7
1
%
6
6 1
f i n a n c e
1
6 2
4
%
s k i l l s
2
0 3
0
%
6
%
e
s
N
T
o
o
t
a
l
In percentage
0
0
%
The main reason for lack of promotes
L a c k
L a c k
o f
o f
O
t
h
e
r
3
0 4
T
o
t
a
l
6
6 1
0
0
%
Source: own survey 2019
According to the investigation made 71% of the total population responded that they
did not make any promotional and advertising activities to theirs products and their
services because of lack of finance, lack of skill and other problems.
According to Haily, (2003) there are many Small Business Enterprise provides
products and service would buy if they knew about these products. Most of the need
of many potential suppliers would about the products which provided by producers
and the Small Business Enterprises in Mettu town also face the same situation stated
on the above charts.
35
The respondent are also asked to mention some of the major problems why they are
not promoting and not advertising their products and services and they responded that
lack of finance and lack of necessary skill are their main problem which constituent
30% and 24% respectively. The remaining 46% of the respondents mentioned other
problems like lack of access to media to get many things. From these the researcher
concludes that most of the enterprises of Small Business Enterprise which accounts
71% of the total respondents do not make any promotional activities is also one of the
major cause for business failure and it is also factors affecting the growth and
expansion of Small Business Enterprises in Mettu town.
4.1.18. An opportunity of Training and Development Program Given to the
Businesses.
Table4.1.18. training and development program to the business
Is the sector gets an opportunity of training and development program?
Number of respondents
Y
1
9 2
9
%
4
7 7
1
%
6
6 1
e
s
N
T
o
o
t
a
l
In percentage
0
0
%
Source: own survey 2019
The above table shows the respondents response regarding opportunity of training and
development program it had been given in any program available for Small Business
Enterprise in Mettu town has been very minimal. As it shown in the above table only
29% of the total respondents said that they got an opportunity of training and
development. The remaining which is the largest percentage about 71% of the
respondents have not got an opportunity of training and development program
because of lack of sufficient skilled man power and lack of technology related to the
sectors. From these information the researcher has concluded that in order to aware
the businessmen and to motivate them in their business activities continued to expand
or enlarge the business, training and development program is needed but from the
above information training program available for Small Business Enterprise in Mettu
town is very minimal these is the factors that affecting the growth and expansion of
the Small Business Enterprises.
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CHAPTER FIVE
5. CONCLUSION AND RECOMMENDATION
5.1. Conclusion
In this paper an attempt was made find out the factors that affect the growth and
expansion of Small Business Enterprises in Mettu town. The general growth
Characteristics of respondent’s growth and expansion operators Small Business
Enterprise agency office through the stratified random sampling methods would
employed of total population from asking 66 respondents. Furthermore, most sample
population of sample methods by the level files manufacturing 7, trade 22 constriction
5, urban agricultural 4, and service sector 28 to be taken.
According to the investigation shows regarding the employment status the respondent,
most of respondent beyond manufacturing, Trades, constriction, urban agriculture and
service sector are enhancing of economic activity, providing job opportunity and
enhancing motivation knowledge and skill of potential entrepreneurs.
In addition, as most sample population responses shows, generation income reducing
poverty and increase verity of consumption are the most satisfaction growth in small
business. Consequently these achievements enable manager, or owners and
employees of the business to raise their standard living condition.
According to the finding of the study, concerning to government support on growth
and expansion Small Business Enterprises in Mettu town by searching better
marketing opportunity and giving training to employees to develop their skills and
abilities inspires small business. In addition, the office motivates the owners and
employed of the industries by providing of mandatory information by expanding
banking facilities and advancing of financial support in the form of credits.
Among the other problems, the most challenges which existing in growth and
expansion small business of Mettu town are financial related problems infrastructure
problems, , raw material shortages and marketing related problems. Regarding to the
factor affecting the growth and expansion of Small Business Enterprises, the sample
of population raises different solutions to coup up the major challenges of Small
Business Enterprises. Depending up on the majority sample responses, efficient
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supply of raw material giving training to the employees of business and ensuring
financial institutions are takes as a key solution for such matters, therefore, concludes
that more effort, assistance, promotion activities and training program to encourage
the entrepreneurs is still an urgent need of this sector in Mettu town.
5.2. Recommendation
Based on the study, the following recommendation are important and should be taken
in to accounts of growth and expansion of small business had to better contribute to
un-employment problems and poverty reduction in Mettu town.
 Creating linkage with government and other financial outstanding
industries which help the employees in doing business, finance,
support and other physical services.
 Through making encouraging policy of banking systems to provide
credit to small business enterprise according to their ability and
diverging ranges of collateral type of requirement in regards of loan
pay-back term and interest agreement obligations.
 Continuous and sustainable training programs for person participating
in small business sector through the necessary skill and knowledge.
 Common production and marketing center should be set up with
modern infrastructural facilities. This will help in promoting expert and
servers and thus, eliminate unnecessary marketing business.
 Creating effective domestic demand for small business product is
crucial elements in boosting competitiveness, specifically the nature
and quality of demand is much more important than size.
 Reducing women`s immigration from Saudi Arabia, Beirut, Dubai by
creating job opportunity and enhance women`s participation and by
creating awareness.
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