The article examines the phenomenological foundations of small and medium business development in a risk economy. The object of the study is small and medium businesses. The aim of the work is to develop theoretical and methodological foundations for the development of small and medium-sized businesses in the context of risk economics. The study used general scientific methods, a systems approach, an institutional approach, as well as other general scientific methods and principles of cognition. As a result of the study, it was found that the phenomenological features of small and medium businesses can be determined taking into account the socio-economic policy pursued by the state. Given the high degree of heterogeneity of the small and medium business sector, support for its development should be differentiated by industry, territorial and social characteristics. It is important to develop support mechanisms that do not contradict structural policy, promote the growth of innovative potential and are aimed at increasing the socio-economic sustainability of society. It has been established that it is necessary to provide state support to small and medium businesses if they contribute to the technological modernization of the economy or their activities are important for maintaining social standards in rural areas. The significance and limitations of the findings are shown and prospects for further research are identified.