Challenges of Entrepreneurs in Establishing of New Venture, in Ethiopia: In a Case of Some Selected Small and Micro Enterprises of South Ethiopia, Wolaita Sodo Town

Abstract

This study investigated challenges that are faced by entrepreneurs in establishing new venture in case of Small and micro enterprises in Wolaita Sodo town, Southern Ethiopia and the objectives were to identify challenges and suggest solutions. Followed these qualitative and descriptive research design were adopted and structured questionnaires together with unstructured interviews were used to gather data from the respondents. Small and Micro Enterprises (SMEs) owners and managers in the Wolaita Sodo town were the target population. A sample of seventy-two respondents was drawn using stratified sampling method. Most of the respondents who participated in the study were from the service sector, manufacturing sector, urban agriculture and the construction sectors. Key challenges identified to the establishment of new venture were: working capital, working place, access to finance and credit services, poor vertical communication to government offices, inadequate government and other stakeholders support. Managerial skills gap to business, suffer from lack of knowledge on business plan preparation, poor in record keeping, lack of reliable technology, low price for new product and services in market, and customer attitude on new products. The research concludes that the challenges of SMES would be solved by a collaborative effort of SMEs themselves, the government and the other concerned stakeholders.

 Therefore, it is recommended that since SMEs are the back bone of reducing poverty and creating job opportunity for Ethiopian nation, the government should provide working place and capital access for SMEs, financial institutions set more flexible, affordable and attractive requirements in financing micro and small enterprises. The SMES also should work for the better of their business through getting training on managerial knowledge gap, and their other limitations.