Factors affecting performance of SMEs in Tanzania: a case study of selected SMEs in Dar es Salaam

This study was undertaken to find out the factors which influence the performance of SMEs in Tanzania. More specifically, the study sought to evaluate the influence of entrepreneurs’ characteristics, enterprise characteristics and external factors on SMEs’ performance. A sample of 98 SMEs spread in three municipalities in Dar es Salaam were involved in the study. Participants were selected through a simple random sampling process. Questionnaires and interview were used as data collection tools. The collected data were analyses by using the Statistical Package for Social Sciences (SPSS), which generated the frequency distributions, percentages, means, standard deviation, regression and correlation. The findings show that entrepreneur characteristics, enterprise characteristics and external factors have significant influence on the performance of SMEs in Tanzania According to the attempted regression analysis, characteristics of entrepreneurs are the most significant factors (with unstandardized coefficient of .526, and standardized .432), followed by enterprise characteristics (.295 and -349 for unstandardized and standardized respectively). External factors are the least significant as suggested by unstandardized coefficient of .210 and standardized coefficient of .241.
The study recommends that the government should work closely with entrepreneurs to see that all the factors mentioned are addressed in order to improve the performance of SMEs in the country. Specifically, the government should work on the policy, infrastructure and access to capital for SMEs. This is because small businesses are important in the national development since they create employment and contribute to the government revenue. Similarly, entrepreneurs need to ensure that they work on the factors within their reach, including minimizing such challenges as legal registration, business skills and level of education.