Author(s): Ms. Jain J.M., Shanmugam Munuswamy
Micro enterprises contribute significantly to an economy's balanced growth by creating and providing employment opportunities, thereby contributing to income generation. Financial performance is a subjective indicator of how well-run businesses can leverage their assets to generate future cash inflow Ahmad & Jamil. The purpose of this paper is to investigate the variables that affect the financial performance of micro businesses. To that end, an empirical study was conducted in the Indian context, with a focus on the state of Kerala. A multistage random sampling technique was used to select 180 micro enterprises operating under the Kudumbashree Mission (KM) in three districts. The study examined the factors affecting the profit and sales performance of the group micro enterprises using a panel data regression approach with a pooled OLS model. The findings indicated that sales revenue, enterprise region, and product type all had a significant impact on profitability performance. However, the age of the enterprise, its location (rural/urban), and the product category had no effect on its profitability performance. While the age of the enterprise and the region had a direct positive relationship with sales revenue, the location of the enterprise and the product category had no significant effect on sales revenue.