This study aims at examining the general characteristics of rural micro enterprises, and factorsrndetermining their survival and growth in an area with chronically low agricultural output: BasornWorena Woreda, North Shoa Zone. Two peasant associations one accessible to major markets - TalakrnAmba- and the other with relatively little access located in the gorge - Atse Wash- are the focus of thisrnstudy.rnBased on a survey conducted in the two Peasant Associations, the paper revealed that micrornenterprises are sources of both employment and income for significant proportion of the households inrnthe area. People mainly use the sector as an alternative source of income and employmelll to thernagricultural sector. A wide range of activities are undertaken in the sector by different people, whichrnilluminates the intense potentials it has.rnOwing to data constraint, the survival analysis focused only 'on micro entelprises operated by creditrnserviced households, who are mainly female. The main reason for the closure of female headedrnelltelprises based all descriptive analysis, is non - economic, while the economic reasons are confinedrnto market and finanCial constraints. The paper compares the major differences and similarities ofrnsurviving and closed micro enterprises.rnOn the other hand based on a general sample, using linear regression method the growth analysis alsornidentified factors influencing micro entelprise growth in the area. Accordingly characteristics of thernoperator, the entelprise as well as the household have explained the growth of micro entelprises. Thernpaper discusses this result in relation to the theol)1 established.rnConstraints faced by the operators were also investigated, accordingly the major problem of MErnactivities in the area are found to be finanCial, demand and input problems that affect them in therndifferent stages of their life. Differences have also been found among different activities. Although thernpresence of few financial services indicated, [heir prospect seems limited. Besides, finanCial supportrnalone doesn't ensure development of the sector, other technical support are found to be crucial. Therngovernment has given due emphasis to the sector in general. The micro and small entelpriserndevelopment and promotion strategy seems promising to exploit the potentials of the sector. However,rnth e study area could not benefit much so far pam what is stated in the strategy.rnIn general, the findings, indicate that the ME sector is an alternative source of income as well asrnemployment in the area, that it shares some of the burden 011 the agricultural sector. However, muchrnattention is required pam development practitioners to exploit the potentials MEs have.