The Small and Medium Enterprisers ( SME) sector plays major role in the National economy, including employment creation and supplying a wide range of products services to consumers. With the globalization, rapid developments in information technology applications and heavy growth in different business sectors as experienced today, several new issues emerge in SMEs. The fact that Sri Lanka underwent a long period of major disturbances has aggravated this situation. Under the circumstances, these businesses will have to transform themselves to new situations and managing such changes are challenging. This research group aim to examine the issues faced by SMEs for growth and development as well as the impact of external and internal environmental changes towards productivity and growth of SMEs in Sri Lanka.