Microenterprises and also the attached entrepreneurs in the developing countries are very diverse. Therefore, issues and barriers related to microenterprises are at a wide range. It is crucial in identifying underlying segmentation stories beforehand any policy intervention that direct to improve micro entrepreneurship. This study aims to identify de facto typologies and potential entrepreneurship in urban informal sector in Sri Lanka. Data were drawn from a sample of 300 micro entrepreneurs chosen under multi stage cluster sampling method. Ward’s hierarchical clustering method identified five main segments considering demographic, socioeconomic, business related and also psychological factors related to entrepreneurs. According to the characteristics recorded, identified five clusters were labeled as survival, potential, survival-forever, transitory and self-sufficient for cluster 1 to 5 respectively. Survival or survival-forever groups were not operatable for a growing firm due to their setup and other related characteristics while self-sufficient group had least capacity to expand within micro basis. Cluster two and four had growth oriented characteristics and hence potential groups that were finalized as the viable micro entrepreneurial blocks which have greater potential to grow with complementary assistances.
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