This study is to find out the challenges and prospects faced by female entrepreneurs within micro and small enterprises in the case of salon owners in Bahir Dar City administration. Although various empirical studies show most micro and small enterprises (MSEs) are operated by women, and face many challenges, this research is done concerning developed countries, and they have the problem of generalization. To this end, a qualitative research approach is pursued. The qualitative data is gathered through semi-structured interviews from beauty salon owner women. Consequently, the findings reveal that the major challenges that hinder the salon industry according to this research are classified as a problem in startup and the growth phase, which in turn affect the prospects of these enterprises in the future. To mitigate these challenges, banks should have a specific loan portfolio for women entrepreneurs in salon businesses and introduce more financial access for women.