Livelihood strategies are a combination of activities and actions that individuals undertake to accomplish their desired goals. The current study aimed to examine the impacts of livelihood strategies on business performance. This study explored social capital as a mediator between livelihood strategies and business performance. This study further investigated how environmental perception strengthens livelihood strategies and business performance. For data collection, a quantitative research method and a random sampling technique were used. Data were collected through 550 questionnaires from small–medium enterprises (SMEs) in China. To test the study hypotheses, structural equation modeling (SEM) was performed. The findings confirm the notion that livelihood strategies are positively associated with business performance. The results also corroborate the notion that social capital mediates the association between livelihood strategies and business performance. The outcome validates the notion that livelihood strategies and business performance are further articulated when environmental perception is higher. Environmental perception moderated the impacts of livelihood strategies on business performance via social capital. The current research provides a better understanding of how livelihood strategies facilitate amplified business performance via social capital and the valuable role of environmental perception in research models.