This paper aims to explore prospects and opportunities of the use of Social Media Marketing tools by Small & Medium Enterprises (SMEs) in Pakistan, to develop and promote their business. The research data findings postulate the fact that the SMEs constitute over 90 percent of 3.2 million business enterprises listed under the Economic Census of Pakistan (2005,) generate 25 percent of manufacturing export earnings and contribute 30 percent to the annual GDP in the country. Despite this fact, the SMEs are considered to be less formally organized sector of the economy relative to large enterprises, have limited access to financial resources and are limited to their scale of production. Social Media Marketing, on the other hand, operates on a less complex organizational structure, requires lower financial investments and even makes an organization appear to be larger than its actual size. These analogous attributes establish a correlation between SMEs and Social Media Marketing. This paper intends to identify the various possibilities which can contribute to the growth and development of the SME sector in Pakistan. The study examines the data evidence and empirically tests the correlation between SME business progress & social media as a mode of business promotion. Consequently, this research paper focuses on how small businesses can use Social Media not only for advertising and marketing their products and services but also for building the business overall, employing transactional mechanisms, sharing information with customers and receiving their feedback and recommendations on a regular basis.