The objective of this study is to assess motivation, challenges and performances of tourismrnentrepreneurs in Addis Ababa city. Cross sectional design was employed to explain the majorrnfactors like motivation, challenges and performance of entrepreneurs by conducting surveyrnamong 144 souvenir entrepreneurs. The challenge of business performance was analyzed byrnranking order of items. The result reveals too much government taxation, lack of access tornfinance are the constraining challenges. Principal component analysis (PCA) was used tornidentify the motivational factors of business startups and the result also reveals four pullrnmotivational factors such as independence, alertness, confidence and initiation which arernvalidated by discriminatory analysis test. Additionally, four factors such as risk, satisfaction,rneffectiveness and unemployment factors are identified under push motive factors and validated inrnthe same procedures. The reliability of each factors were tested using Cronbach alpha andrnvalidated for the first time in Ethiopia especially in tourism sector.rnFinally, hierarchical regression analysis was conducted to measure the impact of independentrnvariables (control variables) on independent variables such as sales, profit, and asset andrnemployment performance of the firms. The result implies factors, such as independence hasrnpositive association with sales while effectiveness, risk taking, initiation and alertness havernnegative association with sales performance whereas effectiveness and alertness have negativernassociation with profit performance due to the firms werenâ€™t used resources wisely for profitrnmaking.