One of the most significant functional strategies small and medium enterprises (SMEs) apply to improve performance is a marketing strategy. This study aims to investigate the effect of marketing strategy on business performance of SMEs in Debre Markos City. Only quantitative research methods and both descriptive and explanatory research designs were employed in accordance with the research objectives and queries. Purposive sampling and proportionate stratification were the only approaches used in the study. A systematic questionnaire was created and sent to 382 owners and/or managers of SMEs in the four sub cities (Teklehaimanot, tedla gualu, abema, menkorer) as a sample in order to obtain quantitative data. 350 questionnaires have been received and are valid for data processing, representing a 91.6% response rate. The quantitative information was examined using approaches that use inference and description. According to the results of descriptive statistics, product, price, promotion, place, and customer orientation all had mean scores that were oriented towards agreement. Performance, the dependent variable, and each independent variable show a strong association. Product was more strongly correlated with performance in this instance. Similarly, only five of the predictor variables, product, price, promotion, place, customer orientation, and product had a positive and substantial effect on the performance of SMEs. This was revealed by the empirical results of the multiple regression. These independent variables were significant joint predictors of performance, according to the findings. The independent variables explained 70.0% of the performance variance collectively. Lastly, suggestions were made for SMEs based on the findings of the study.