There is a concurrence among different stakeholders such as policy makers, economists, and business experts that Micro Small and Medium enterprises (MSMEs) are engines of economic growth. The dynamic role of MSMEs in developing countries insures them as engines through which the growth objectives of developing countries can be achieved. However many problems encounter MSMEs and as a result, many firms perform dismally and fail to grow. Given this high failure rate, it becomes vital to research the factors required to enable the MSMEs to survive and indeed progress to the growth phase of the organizational life cycle. The study was undertaken to know the effect of firms’ characteristics in accessing of financing and other factors affecting the performance of MSMEs in Southern Ethiopia. The study used qualitative and quantitative research design. The target population for the study was 345 enterprises registered and operated in Hawassa City, Ethiopia. The study used a survey questionnaire and interview to collect the required primary data from a sample of 260 MSMEs and also documents were reviewed to collect the necessary secondary data. The collected data were coded, quantified and analyzed quantitatively and qualitatively. The data were analyzed by the use of statistical package for social sciences (SPSS) software. The study concluded that all the independent variables except Legal Status of Business Enterprises produced statistically significant results and all the Independent variables had a positive relationship with the dependent variable. In addition to this marketing, managerial and environmental constraints are found to affect the operating activities of enterprises in southern Ethiopia.
Key words: Accessing of financing, characteristics, micro small and medium enterprises (MSMEs), performance.