The business environment is turbulent and laced with uncertainty which is continuously changing and is full of opportunities and challenges. However, studies that assess economic, socio-cultural and technology environment on performance of SMEs in Oyo State are insufficient. As a result, this study investigated the effect of external business environment (economic, socio-cultural and technology) on SMEs performance in Oyo State. Questionnaire was distributed using cluster sampling. 424 copies of the questionnaire were used for analysis with a population of 7,987 registered SMEs operating within the state. Partial Least Square - Structural Equation Model (PLS-SEM) path modelling was employed to process the data. Finding revealed that economic and socio-cultural environment have positive significant effect on performance of SMEs at 1 and 5 % significant level respectively, while technology environment have negative effect on SMEs performance at 10% significant level. The study concluded that external business environment has positive effect on performance of Small and Medium Enterprises (SMEs). The study therefore recommended that owners/managers of SMEs should have positive perception towards economic environment as customers today tend to have control of the economic environment in order to increase their performance. The study also recommended that owners/managers of SMEs should adapt to the cultural environment in which their business is set, thereby producing what the cultural environment wants. This can be done by carrying out feasibility studies to know what the environment really need. Finally, the study recommended that prompt knowledge of new technologies should be adapted by the owners/managers of SMEs as it will go a long way in enhancing the quality of goods and services.