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This paper describes how performance measures were selected and then implemented in two small to medium size enterprises (SMEs) in Central Scotland. It then goes on to consider the impact of these measures on the performance of those businesses using data generated from an action research approach. A review of academic literature on the barriers to implementation of performance measurement systems in general, and those specifically relating to SMEs, suggested that considerable difficulties can be found in implementing performance measures. These perceived difficulties are considered and discussed in relation to the SMEs in question and the approaches used to minimize and overcome them are described. A systematic approach that is well resourced and focused on measuring variation in performance of entire ‘operate’ processes during execution is found to enable business improvement activity. The impact of using this approach on operations management strategy in each SME is reported. The research suggests that implementation of performance measures in an SME will have considerable impact on business performance if the process for implementation is well structured, resourced and focused on improving the capability of ‘operate’ processes. [ABSTRACT FROM AUTHOR]