Entrepreneurship plays a pivotal role in driving the economic growth of developing countries like Malaysia, where Small and Medium Enterprises (SMEs) are crucial to job creation, innovation, and national income generation. However, Malaysian SMEs face various challenges, including limited access to finance, technological adoption barriers, and a lack of skilled workforce. These issues emphasize the importance of entrepreneurial competencies, which are the set of knowledge, skills, and attitudes that enable entrepreneurs to navigate challenges and foster business growth. This paper investigates the role of entrepreneurial competencies in the success of SMEs, particularly in Malaysia. It highlights the critical need for innovation, strategic thinking, leadership, and risk management skills. The study explores the gaps in entrepreneurial education and training and advocates for a more targeted approach to developing these competencies. Additionally, it discusses the impact of digital transformation, financial literacy, and mentorship programs in enhancing SMEs' performance. By addressing these challenges and promoting entrepreneurial education, the paper aims to provide insights for policymakers, educators, and entrepreneurs, facilitating the growth and sustainability of SMEs in Malaysia.