It is now widely accepted by tourism industry personnel that small and medium enterprises (SMEs) make an important contribution to the industry and the Australian economy. The researchers and the Sustainable Tourism CRC considered it a high priority to gain a better understanding of the practices of successful small and medium tourism enterprises (SMTEs) in order to support the improved performance outcomes of SMTEs in general. The report is based on the analysis of the submissions of winners of 2001 State and Territory tourism awards. Interviews have also been conducted with the selected firms and the Executive Officers of some of the key industry associations to help verify the findings of the study. The report concludes that this study is a starting point to encourage discussion and debate about what SMTEs need to help them undertake a continual improvement approach to business operation. In order to support businesses in achieving this goal it is also recommended that further work to develop both a diagnostic tool to be used for self-assessment by SMTEs and a databank of SMTE good practices be undertaken.