You don't actually
need to do the SBM event to damage the boss.
It's bonus damage, really, because it gets its own turn and does quite a lot of damage even if you miss some beats, but it's not
necessary damage so if you don't want to use it you don't have to.
You can kill every boss without ever using SBM, it will just be slower (admittedly quite a lot slower in some cases) and you might have to be more careful as a result.
Also, you don't hit X. If you hit X you will miss every time, because hitting X does nothing. I'm not saying this to be mean, I'm saying this because I made that mistake on the Japanese release before I realised you had to hit O
Leveling up your characters' skills and equipment is more important than actually leveling up the characters, especially because the yellow seed gems used to level your characters are few and far between early on.
What I'd say is to take a look at how you're spending Materia. Leveling your characters' ability to create weapons/armour using Materia is more important than leveling the characters themselves
but it's important to note that leveling those won't actually matter unless you also spend Breed gems to actually create the better weapons/armour and then equip them.
(It's also important to note that when you try to use Breed gems to get weapons/armour and it says
"Insufficient level" it doesn't mean the
character's level, it means the level of that slot on the upgrade tree).
It would also be worth taking a look at the tactics you've equipped. Ichiya/Mana can equip items to their tactics sets that will work to heal themselves, whereas Kazuomi has a Heal Skill that can heal everyone.
(Though, erm, his heal skill doesn't heal "all ally HP" it heals the HP of all allies. It's not a full heal, basically).
And look into the skills each character has in their Command Trees to decide how best to spend your Force gems.
Ichiya, for example, has passive skills that will reduce the physical damage all allies take if you spec for them, which can be useful.
Mana has passive skills which improve everyone's hit and evade. Alternatively, she has skills that improve everyone's item use (if you're using items to heal that might help), or an attack skill (Cursed Arrow) that will recover her own health based on the damage she does if she uses it.
Kazu has passive skills that will improve the magic and status defense of all allies, or he has passives that will strengthen his spell effects which will make his heals more effective.