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It is generally believed that the role of micro and small enterprises (MSEs) is not only limited to reduction of unemployment and poverty but also for industrial transformation, industrial dispersal to different rural towns and income. However, this depends on the nature and performance of the enterprises. Particularly, furniture manufacturing MSEs in Ethiopia have great role to manufacturing sector as the country has great convection to expand in the area. Despite this fact, furniture manufacturing MSEs as that of the overall MSEs have confronted with several factors that affect their performance. Some enterprises fail to sustain, some others remain for long period of time without transforming, and most are producing similar and non-standard products. Accordingly, this research aims in identifying and analyzing the challenges, their impact and potential opportunities of furniture manufacturing MSEs in randomly selected eight larger cities of Amhara region on 120 enterprises using structured questionnaire, interview and some focus group discussion with experts and enterprise owners. Data analysis and presentation was made using SPSS tools and Impact-Effort analysis matrix tool. The findings from questionnaire analysis and