Small and medium-sized enterprises (SMEs) in the European manufacturing sector, especially those producing investment goods, are pressured to adapt circular economy principles, while facing complex challenges identifying suitable business models and technologies. Thus, this paper has two objectives: first investigating the barriers and opportunities for SMEs to adopt circular business models (CBMs) and leverage digital technologies in pursuit of sustainable value creation in a narrative review. The review highlights the critical role of digital solutions in enabling transparency and efficiency, while also emphasising the need for tailored models and collaborative approaches. Secondly, based on the findings and gaps, we discuss the pros and cons of strategic planning tools to overcome the identified barriers. Backcasting is presented as a suitable approach, with outcomes that can provide actionable insights for policy, research, and industry, offering a roadmap to support SMEs in transitioning towards circular, data-driven business models that underpin a resilient and sustainable regional economy.