The Small Business Firm which put in the competitive environment, take competitive advantage through effective HR Practices. Most of all, performance appraisal is role of the basic data set which affects in all HR Practices. so fair, objective and systematic performance appraisal system must be constructed. This is Damoolsystec’s case shows that how to build a process of small business firm’s performance appraisal system for strategic human resource management(SHRM). Participation, commitment and consensus of the members leads minimizing resistance of change, connecting with members’ development and competency. There is remarkable meaning that case, best practice of SHRM, guide to performance appraisal system building process in small business firms.