This research aims to investigate Factors Affecting Transitional Development of SmallrnScale to Medium Scale Enterprise in Sebeta Town: Challenges, Opportunities andrnProspects Hence, the situation whether the objective of these MSEs is met merits specialrnconsideration of transitional development of small scale Enterprises. This study tries tornanswer three important questions: What are the major internal and external challenges,rnopportunities and prospects in transitional development of Small Scale to medium scalernenterprise?rnWhat are the key strategies used to develop MSEs and to solve thernchallenges faced by the SMEs transitional development of Small Scale to medium scalernenterprise? Do all MSEs actors in government sectors play their role according thernMSEs strategy? With the above objectives in mind, data was gathered throughrnQuestionnaire, Interview and Review of both published and unpublished materials. Therninformation gleaned through questionnaire from a sample of 358 operators and face-to-rnface interviews were conducted with 5 officials of MSEs actors in oromia region andrnsebata Town. Eventually, using a mix of qualitative and quantitative tools, the studyrnfound out major challenges which seem to affect transitional development of small scalernEnterprises in Sabete Town which include:rnimplementation problems related torngovernment bodies at each level, inadequate finance. For the above challenges thernOromia regional government bodies should provide affordable alternative sources ofrnfinance and should be strength the government institutions at different levels, to play arnmajor role in positively influencing the development of MSEs. Hence, there is a need forrnstrengthening the MSEs growth, based on findings, recommendations to governmentrnbodies, to operators of MSEs and suggestions for other researchers are forwarded