Valuable knowledge acquired by small manufacturing enterprises (SMEs) over time can be lost through the exit of staff. The difficulty of retaining knowledge lies in the fact that part of the knowledge involved is tacit in nature and is highly, if not totally, inarticulable. This paper analyzes the explicit/tacit nature of the design knowledge involved in projects undertaken by an SME. It is analyzed to provide a model of knowledge application and a schema for eliciting the mental process during knowledge application and the types of knowledge used respectively. The tacit characteristics associated with the application of design knowledge are explored. The paper also discusses the tactics that can be employed to tackle the knowledge retention problem as experienced by the SME.