For the development of a country, it is realized that the nation has not been able to reap full benefits of industrialization without the capability and capacity of Small and Medium Enterprises (SMEs) in the country. To increase the growth and development of the country, the importance of SMEs in the region can not be ignored. SMEs development is the process of gradually becoming a major driving force of the global economy. With the help of SMEs introduction, Pakistan’s economy continues to post an impressive growth rate for the last few years. From this recent growth, SMEs has been declared an engine of the economic growth of the country. Sustainable economic development plays a pivotal role in bringing about prosperity and reducing poverty. Small and Medium Enterprises are often found at the heart of local and regional economies. Enterprises create jobs, wealth and feel good factor for local communities, encouraging further investment. Greater relevance must be given to the role that small and medium enterprises can play in generating wealth and eradicating poverty. Communities are responsible themselves for identifying the need for SMEs growth and skill development training. The culture of enterprise development exists with the objectives set against a number of performance indicators namely, enhanced business and technical skills, good govern improved access to product markets, reliable taxation structure and finally access to credit facilities to support business initiatives and support by local government is a symbol of their commitment to local development and empowerment. Pakistan being a developing country needs attention in most of the potential areas, where efforts have been made from the last few decades. SMEs are the backbone of Pakistan’s economy. It’s represent 90 1 per cent of all enterprises in the country, providing millions of jobs and is essential source for entrepreneurial spirit and innovation. SMEs profile in the Province is neither accessible nor readable for the investor, because number of problems is attached inherently to this region. In the light of these problems, the local 1 Pakistan Country Assistance Strategy, World Bank Report, Annex. II, page 3. 1investors and side by side the foreign investor’s are hesitating to come here for investment purpose. Secondly, disparity on the part of the Government, has also neglected this region. But this region has a fertile approach for SMEs establishments. NWFP possesses a potential structure for promoting SMEs sector, so as to bring at par with other provinces of the country. For this purpose proper strategic planning is needed. The research conducted in this field highlights number of problems and the status of SMEs in the region. This study has examines the present structure of SMEs and its problems through primary and secondary data collected. Further, the study gives the possible direction for evaluating the prospects of SMEs in the region. These problems are pushed with a sustainable recommendation for future development. SMEs are the most sensitive of all to changes in the business environment. They are the first to suffer if weighed down with excessive number of bureaucracy. They are first to flourish from initiatives to cut down red tapeism and reward success system. SMEs must be considered as a main driver of innovation, employment, poverty reduction and social integration. This research study having a theoretical background for determining different hypotheses, in the name of i.e. failure of SMEs is the result of lack of managerial knowledge, marketing effectiveness leads to the success of SMEs, Ineffective HRD is the basic cause of SMEs failure, non-availability of legal framework is a problem for SMEs, in-sufficient financial support is another setback for SMEs and finally, lack of communication with the venders. These hypotheses were tested in the light of information collected by a written questionnaire distributed among different business units in the region. Then these responses were analyzed by using different statistical tools like frequency distribution, Chi-Square, Cross Correlation and ANOVA techniques, to obtain the desired results for the support of the problems faced by the SMEs sector in the region. The results obtained from the different analysis regarding the various problems in the realm of SMEs are in the command of an ordinary entrepreneurs in the region, while some of the problems not come in the direct command of the entrepreneur that need facilitation from the government. The problems faced by SMEs are conformed by the results obtained from data regarding them are the following: 2· Depending on the old and cultural style management in SMEs region is the basic root cause of backwardness. · Lack of marketing techniques and its adjustment with the current change in the market is another flaw on the part of SMEs, where they can not afford these commercial expenditures. · HR application in SMEs are not of acquired standard nor sufficient to meet the requirement of the sector. · Legality and growth of SMEs rotate around the Government legal structure enforceability in the region. · Funds are the life blood of SMEs, if it is properly managed. Lack of funding and access to the source of funding is the basic issues for SMEs development. Measures should also be adopted to strengthen the relationship among the SMEs and Government to promote top class SMEs support system. Emphasis must be placed on education and training for the entrepreneurship. Tax system must be made conducive for SMEs expansion and job creation. Measures should be adopted to improve the technological capacity of SMEs. These reforms should be included in the program launched for promoting technology dissemination towards SMEs as well as the capacity to identify, select and adapt technologies to improve their capabilities to enter in the domestic as well as in the International markets freely.