The research subject matter in the context of this thesis are the success factors of micro-enterprises in the Republic of Croatia. Due to extreme importance of micro-enterprises for Croatian economy, insufficiently investigated specifics of their business conducts and for the purposes of improving the level of innovation, competitiveness and achieving positive financial results, the success factors of their business conduct are explored. This paper explores the extent to which the quality of human resources and the level of innovation affect their success, and to which extent are performance indicators used by the owners of micro-enterprises. Based on the results, a customized Balanced Scorecard model has been created for measuring business performance of micro enterprises based on financial and non-financial indicators of performance and integration with strategic directions of micro enterprises. According to a defined subject matter and aims of this paper, four hypotheses have been set and the goal was to confirm them using empirical research and a draft model. The introductory part defines the subject matter and research objectives, hypotheses and research methodology, expected scientific contribution and briefly describes the structure of the paper. The second part of the paper presents the theoretical bases, the importance of entrepreneurship and micro enterprises, analyses macroeconomic and business environment, and the state and prospects of micro-enterprises in the Republic of Croatia and the region of Slavonia and Baranja. The third chapter describes the factors of business success of micro-enterprises with a focus on human resources and innovation as key success factors. The fourth chapter is a theoretical overview of the importance of enterprise management, ways of measuring business performance, and describes BSC model construction. Methodology of research, the results of the empirical research and the proposal of the BSC model as a tool for defining and monitoring the implementation of the development strategy of micro enterprises are contents of the fifth chapter. The sixth chapter contains the results of set hypotheses and recommendations for future research. On the basis of summarized results of empirical research conducted on a sample of micro enterprises from the region of Slavonia and Baranja and the results of performed statistical tests, all hypotheses have been confirmed. The final part of the paper presents concluding observations.