Urbanization processes have been determining socio-economic life for the past two centuries, influencing the development of society and its economic opportunities. The current stage of urbanization creates new challenges and prospects for sustainable economic growth. In the context of economic transformations taking place in many countries, urbanization affects the situation in business, causing both new difficulties and opportunities for the development of production and economic activities. The current economic situation in the world, as well as in Ukraine, is characterized by a depressed situation caused by the accumulation of ineffective reforms and an unstable geopolitical situation. Even so, urbanization and transformation processes can be a key factor in activating small and medium-sized businesses, which play an important role in economic development. The paper aims to identify effective strategies to reduce the negative impact of economic transformations and find new opportunities for the development of small and medium-sized businesses in the context of urbanization. By analyzing the inter-action of these factors, it is possible to develop innovative strategies aimed at supporting and stimulating the business environment in a transformational economy, ensuring sustainable and balanced economic growth.