ABSTRACT: Small and Medium Scale Enterprises (SMEs)have been playing a significant role in the socio-economic development of the countries world over. Despite this vital role in contributing to economic growth and job creation, SMEs are facing many challenges. Consequently, SMEs owners earn low incomes making them poor. A study was conducted in Songea Municipality to assess factors that influence SMEs success. Specifically, the study sought to identify the type and characteristics of SMEs in the study area, establish factors that influence SMEs performance and, identify challenges that face SMEs. A total of 113 SMEs business owners randomly drawn from the area constituted a sample for the study.. The study involved a cross-section survey carried out in the area between April to May, 2015. Data were collected from respondents through face-to face interview using semi structured questionnaire. Collected data were analyzed using SPSS software version 20. Findings show that, the factors that influence SMEs performance as measured in terms of sales turnover, included sex of the business owner, with men’s business performing better than those of female; education level, number of employees, types of business, entrepreneurship skills, start-up capital, access to market and tax rates. Considering the current state of business informality, there is a need to encourage entrepreneurs to formalize their businesses. Procedures for obtaining business licenses should be simplified along with building the capacity of SMEs owners though training to improve their entrepreneurial skills.