An Empirical Study of Key Factors Influencing the Performance of Micro Enterprises

India attain magnificent breakthrough in lifting its maximum population out of poverty. And out of diverse means of poverty alleviation, the most effective way is providing microfinance and promoting self employment and micro enterprise development. But micro enterprise development is varied in different states and as data depicts that in Malwa region of Madhya Pradesh (MP), it is not very impressive. With this objective this research is conducted to study the key factors influencing the performance of micro enterprises. And this study is unique in many aspects as it makes an effort to identify the issues of micro enterprises funded by microfinance providers. The mixed research method design is used and data is collected from 722 respondents of ten districts. Statistical tools like KMO and Bartlett's test and factor analysis are applied to extract the key factors. The findings revealed that the key factors which influence performance of micro enterprises are local business environment, high cost of inputs, management skills, lack of resources and marketing issues. Policy directions are that to develop conducive business environment and to launch awareness programme of schemes in which raw materials and other inputs are available at reasonable rates. Future direction for research is to do specific sector based study of micro enterprises funded by microfinance.