Small and medium-sized enterprises (SMEs) represent in Europe up to 99% of all businesses and provide two thirds of the total employment in private sector. However, business literature as well as training programs often tend to use large companies and corporations as best practice examples for setting up management practices. This research review existing literature on governance and management system development in context of small and medium enterprises and compare findings with three small-medium-sized companies from different European countries. Companies analyzed demonstrate different ways of setting up management system and processes to achieve positive financial and market results. This leads to conclusion that it is essential to achieve fit of management system elements to business circumstances, rather implementing selected good practices. For small and medium enterprises, this is even more important, as they are characterized by limited resources and competences. This paper enlighten challenges SMEs are facing and some possible solutions that will contribute to improving their management and sustainability.