Last decade of high economic turbulence and significant fluctuations has tested managers’ ability to adapt and apply the relevant skill-set and competences to ensure success of their companies in various market conditions. The aim of the research is to clarify the set of managerial competencies required in a dynamic environment. Based on the review of the literature, the competencies and competence model of small and medium enterprise (SME) managers are discussed. A comparison of this theoretical base with the competence needed in specific real-life situations was conducted by organizing focus groups with SME managers. Based on the results of the research, we have developed a set of competencies or competence model and customized list of competencies. The research has limitations: it only explores the managers’ competence and capabilities needs in SMEs; research scope is limited geographically. The results of the research explain the importance of linking management theory and practice, and help managers recognize the competences required in various market conditions.