Abstract: This study examines the constraints and growth potentials of micro and small enterprises. To undertake this study primary data were collected through well-structured and self-administered questionnaire to a sample of 85 micro and small-scale enterprises operated in Mekelle City. In order to explore the relationship between the explanatory variables with the dependent variable different econometric models like multiple regression to examine the growth of MSEs is associated with diffrent constraints and logit model to analyzes how and to what extent the operators’ socio-economics characterstics affect the income growth potential of enterprises were applied.