The profound changes in economy determined by transition to knowledge based economy and knowledge based management are reflected in new SMEs strategic approach. SMEs are facing ever-increasing challenges, brought on by transition to knowledge based economy, marketplace pressures, the nature of the workplace etc. These are reflected in new SMEs strategic approach. Many SMEs are now looking to knowledge based strategies to address these challenges, considering the recent developments of these as a visible result of knowledge based management emergence. Such initiatives are often started with the development of a knowledge management strategy. To be successful, a KM strategy must identify the key needs and issues within the SMEs and provide a framework for addressing these.