This research takes a capability-based approach to studying how entrepreneurs of small and medium-sized businesses (SMBs) undergo digital transformation. It takes a look at how SMEs use digital technology and how entrepreneurial traits like resourcefulness, inventiveness, and flexibility play a role in this process. Digital literacy, leadership, and external assistance are identified as critical facilitators in the study, whereas resource limits and reluctance to change are identified as critical barriers. The results show that when SMEs use these skills, they increase their operational efficiency, expand their market reach, and gain a competitive edge. To aid SMEs on their paths to digital transformation, the report provides policymakers and practitioners with practical insights.