Abstract: The object of the research is the factors that determine the innovative potential of small and medium entrepreneurship in the Republic of Bashkortostan. The subject of the research is the system of economic relations arising in the process of evaluation of the innovative potential of small and medium entrepreneurship in the Republic of Bashkortostan in order to ensure the development and stability of the innovation system and the national security of the Republic. The author analyzes existing methods of estimating the innovative potential and based on her analysis identifies necessary indicators to assess the innovative capacity of small and medium entrepreneurship in the Republic of Bashkortostan as well as reveals their quantitative and qualitative characteristics. Within the framework of qualitative and quantitative approaches to assessment of the innovative potential of small and medium businesses in the Republic of Bashkortostan the author has proposed the systems approach consisting of comparative, structural, efficiency anaylsis methods and expert evaluation method. The author offers her own model for evaluating the innovative potential of small and medium enterprises based on the application of quantitative and qualitative indicators. The main conclusion is that in the process of evaluating the innovative potential it is necessary to consider not only performance indicators but also seasonality, security, and the impact of the number of employed people in small and medium innovation business by the total number of people employed in small and medium enterprises.