Entrepreneurship is the development and driving force of an individual economy regardless of whether it is small, medium or large entrepreneurship. An entrepreneur strives to take responsibility for risk when starting a particular business venture given that any job or idea that is being achieved also needs a new entrepreneur. A true entrepreneur is considered to be one who seeks to put the idea into action. Small business is realized through the establishment of its own trades or companies in order to realize its business plans. Small businesses very often face different problems and conditions, however, small businesses are considered one of the most fundamental sources of competitiveness given innovation potential. The development of innovation in small and medium-sized enterprises achieves a competitive advantage and enables survival in the global market. In this paper, the emphasis is on small and medium-sized enterprises because it will generate future economic growth. The mere fact that two-thirds of employees are employed in small and medium-sized enterprises indicates how important it is to develop innovation in small and medium-sized enterprises. Developing innovations will ensure survival in the market and retain existing jobs, but also provide an opportunity to create new jobs. The aim of this paper is to point out the importance of innovation in small and medium-sized enterprises due to economic growth and development. The purpose of the paper is to point out obstacles to developing innovation in small and medium-sized enterprises and to show ways in which these barriers could be reduced.