In the framework of the economic reform implemented in the CSFR since 1990, the re-establishment of the private sector has been a key element. The role of small and medium-sized enterprises (SMEs) - because of their ability to increase competitiveness of production and consequently the export performance, to adopt new technologies, to modernise the economic structure and to create new employment opportunities - has been extremely important.This paper starts with a brief introduction into the history of industrial organisation in Czechoslovakia and then focuses on the development of the private sector in the country, which was at the beginning almost identical with the sector of SMEs. After these first steps, systemic governmental assistance to SMEs was developed and implemented. This system is explained, and the performance of SMEs and barriers in this field are characterised.