Purpose: The purpose of this paper is to argue that action learning (AL) may provide a means of successfully developing small to medium-sized enterprises (SMEs). Design/methodology/approach: The literature around SME learning suggests a number of processes are important for SME learning which similarity, it is argued, are encompassed in AL. AL may therefore offer a means of developing SME. This argument is then supported through the results of a longitudinal qualitative evaluation study conducted in the north-west of England, which involved the use of AL in 100 SMEs. Findings: The paper finds that the discursive and critical reflection aspects of the set environment appeared to be of great utility and importance to the SMEs. Sets also had an optimum level of which helped them find "common ground". Once common ground was established set members often continued to network and form alliances outside of the set environment. SME owner-managers could discuss both personal and business. Finally, AL offered the opportunity to take time out of the business and "disengage" with the operational allowing them to become more strategic. Practical implications: In this paper both the literature review and the results of the evaluation suggest AL may offer a means of engaging SMEs in training, which is relevant and useful to them. AL offers a way for policy makers and support agencies to get involved with SME management development while retaining context and naturalistic conditions. Originality/value: This paper attempts to move beyond other articles which assess SME response to government initiatives, through examining the literature around SME learning and constructing a rationale which proposes that AL encompasses many of the learning processes suggested in the literature as effective for SME development.