The goal of the article is to show problems connected with innovativeness of small and medium-sized enterprises which is necessary for their sustainable development. The attitude of entrepreneurs towards innovations is to be considered a necessary precondition for innovative processes. The competitiveness of an enterprise is guaranteed by combining resources, technologies and business management skills, therefore innovative processes should encompass all the abovementioned factors. The authors describe the results of innovative activities of Latvian entrepreneurs and examine factors which influence innovative activities of SMEs. The innovative potential of an enterprise is influenced by: the individual, the expression of creativity and practical implementation of innovative solutions. The knowledge of an individual, combined with the possibility to apply it in a result-oriented activity is an important precondition for sustainable development of an enterprise.