This study examined the influence of business strategy on the performance of small and medium scale enterprises (SMEs) in Wakiso District, Uganda. Business strategy is widely regarded as a key determinant of enterprise performance, yet its contribution among Ugandan SMEs remains under-examined. The study investigated how cost leadership strategy, differentiation strategy, market focus strategy, and innovation strategy relate to SME performance. A cross-sectional survey design with a mixed-methods approach was adopted, and data were collected from 180 respondents comprising SME owners, managers, and employees using structured questionnaires and interviews. Descriptive statistics, exploratory factor analysis, Pearson correlation, and structural (path) analysis were used. Factor analysis confirmed the construct validity of the business strategy dimensions, which loaded onto coherent factors and explained 68.6% of the variance. The results revealed a strong positive and significant relationship between business strategy and SME performance (r = 0.68, p < 0.01), with the strategy dimensions jointly explaining 66.0% of the variance in SME performance (R² = 0.660). Differentiation strategy (β = 0.32) and innovation strategy (β = 0.30) emerged as the strongest path predictors. The study concludes that business strategy significantly enhances SME performance and recommends strengthening differentiation and innovation strategies and building strategic management capacity.