Micro and small businesses (MSBs) represent 99.9% of U.S. firms and nearly half of private-sector employment, yet close to 50% fail within their first five years (U.S. SBA, 2016; Turner & Endres, 2017). Understanding how these firms achieve sustained performance under resource constraints remains a critical challenge. This study investigates this issue through the context of independent used car dealerships (UCDs), a highly fragmented and capital-intensive industry characterized by volatile demand, thin margins, and dependence on external financing (IBISWorld, 2024). The study asks: How do owner-managers enact dynamic capabilities to shape business performance outcomes in micro and small businesses? A qualitative, multi-actor design was employed, drawing on semi-structured interviews with owner-managers (n=5), floor plan lenders (n=3), and an industry association representative (n=1). Guided by Dynamic Capabilities Theory (Teece, 2007), the analysis examines how sensing, seizing, and transforming are enacted in practice and shaped by ecosystem interactions. Findings reveal that dynamic capabilities in MSBs are informal, experience-driven, and embedded in daily operations. Sensing is grounded in continuous market engagement; seizing depends on disciplined resource orchestration and external partnerships; and transforming unfolds through incremental, adaptive changes. Managerial capability emerges as central in shaping decision-making and execution, while access to capital both enables growth and constrains strategic flexibility. Digital technologies act as a capability amplifier, enhancing visibility, efficiency, and responsiveness. The study contributes to Dynamic Capabilities Theory by offering a contextual account of capability enactment in resource-constrained firms. It also provides actionable insights for practitioners, lenders, and policymakers seeking to strengthen MSB resilience and performance in dynamic environments.