ABSTRACT

The aim of this study was to investigate the risk factors that affect the performance of small scale enterprises in Owerri North Local Government Area of Imo State, Nigeria. Among the objectives of the study were to identify the risk factors threatening these businesses, and the effect of such risk factors on their performance. A sample of 15 small scale enterprises were selected for the study, and their representatives were interviewed orally and with structured questionnaire. Data collected were analyzed with both descriptive and inferential statistics of frequencies, percentages, correlation and regression analysis. The results revealed that 60% of the enterprises were less than 5 years old in operations; 80% of them had less than 10 employees, about 67% were sole proprietorships, 53% of which are managed by their owners; while 60% of them were engaged in various production and manufacturing activities. Finance, market and sales changes, and political instability were the greatest risk factors that the enterprises faced. The results also showed that 49% of the enterprises made incomes less than 500,000Naira annually, while major indicators of improved performance were increased sales, employment of more workers, and increased profits. It was also revealed that there was a strong negative relationship between risk factors and the age of the enterprises; while the risks negatively affected their performance, accounting for about 85% of variations in their performance in the last five years. It was recommended that administration of credit be restructured to accommodate the small scale enterprises, especially at their infancy stage.