The aim of the paper is the presentation of theoretical foundations and the structure of original, 8-stage statics and dynamics model in the small business life cycle. Based on theoretical considerations, two hypotheses concerning the impact of dynamic and static nature of the life-cycle stages on selected determinants and effects of SMEs’ development were formulated. The hypotheses were verified based on the results of the survey conducted on a sample of 1,741 SMEs from 22 countries of the European Union. The results indicate that companies in the dynamic life-cycle stages are run by more enterprising owners, operate in more promising markets with a higher potential and make greater use of market niches thus limiting the level of competition. At the same time, such companies are characterised by higher levels of flexibility and involvement in innovative activities, which translates into obtaining a significantly higher level of business performance, in the area of quantitative as well as qualitative results.