From the May 2005 issue of Entrepreneur

If you want proof of small business's ability to take initiative and change the nation, just look at the minimum wage issue. While Congress debates the minimum wage, entrepreneurs have taken it upon themselves to simply raise it. In 1995, just short of 2 million Americans were earning minimum wage. By 2003, according to the latest data from the Bureau of Labor Statistics, that number had decreased to about half a million.

Small and midsize businesses have a long and rich history of building up America, and entrepreneurs have done so largely by being innovative. Today, the nation's 25 million small businesses employ more than 50 percent of the private work force and account for more than half of America's nonfarm gross domestic product. According to the SBA, small businesses produce 55 percent of all new innovations.

Innovation has received a lot of press in the business media in recent years, so much so that the eyes can easily glaze over at the mere mention of the word. Yet there's good reason why innovation is constantly analyzed, and market research companies that brainstorm new ideas are thriving: We need innovative companies now more than ever.

"In business, there's always kind of a main issue of the time," says Glenn MacDonald, a professor at the Olin School of Business at Washington University in St. Louis as well as consultant to numerous companies, including Bausch & Lomb, Eastman Kodak, General Motors, IBM and Xerox. "In the '80s, the buzzword was operation efficiency, and right now, innovation is really in the limelight. You can't outdo your competition with low prices, given labor costs, so it has to be something else. And where does that come from? Innovation."

Fortunately for entrepreneurs, innovation comes in many forms. Whether it's by finding a new way to give back to the community, pioneering a concept that changes the way business is done or developing a new product or service that makes your customers' lives just a little better, innovation is accessible for everyone.

Innovative Giving

According to the world population clock, at press time, there were 6,424,555,317 people on the planet. It's a big world, and it's difficult to stand out.

But the nice thing about innovation is that you can stand out by being nice. Christina Miranda, 34, and her business partner, Vickie Feldman de Falco, 46, are New York City marketing mavens--of which there is no shortage. Their company, Redpoint Marketing PR , has attracted clients including Hyatt, Loews Hotels and Visa, but even more impressive is the inventive way they're giving back to the community. Projecting sales of $1.5 million for 2005, Redpoint is dedicated to assisting the Big Brothers Big Sisters of Long Island, and wisely, they're doing it in a way that fits with the creative aspect of their company.

Miranda, who founded Redpoint with Feldman de Falco in 2002, became involved with Big Brothers Big Sisters back when she was in college, first as a volunteer for four years and then as a board member. Two years after starting Redpoint, when it was clear their startup was no longer struggling, Miranda suggested to Feldman de Falco that they become involved with the Long Island chapter, and she enthusiastically agreed.

They formed a charitable program, called Well Red Kids, that puts two to three books in the hands of each child in the group three times per year. The Big Brothers and Sisters are given bookstore gift certificates, so the selection of the titles becomes a bookstore outing that the volunteers and children can do together. "Books help these at-risk kids see a different perspective," says Miranda. "[This program] underscores Redpoint's commitment to creativity."

Redpoint also does pro bono work for Big Brothers Big Sisters of Long Island. It sounds like a huge commitment, but as Miranda says, "There are 24 hours in a day, so we slice things up, and somehow it all gets done." But Miranda and Feldman de Falco urge you to put serious thought into tackling a major charity project.

"You want to make sure you match your goals with your resources," says Feldman de Falco, who raised money in part by going to clients. "It is a business decision, and it does have to fit into your business model [and] make sense for you and your employees. It's great to have a goal to have everybody take off every Monday to volunteer in a soup kitchen, but does that really make sense?" She also recommends tackling community giving "in bite-size chunks, rather than doing everything at once."

Miranda adds that many charitable organizations "are accustomed to well-intentioned people and companies making a lot of promises. You really don't want to let the charity down if you've made a commitment to them."

Innovative Business Practices

Earlier this year, Gregg Steiner became innovative for the same reason that influenced many entrepreneurs before him: He was feeling a little desperate.

Steiner, 35, had joined Cleveland-based Pinxav in 2003, teaming up with his sister, Hallie Friedman, 38, and his grandmother Lillian Harris, 97, who recognized that the diaper-rash product manufacturer needed a new approach. Friedman came aboard in 1999, and revenue doubled in just one year and has kept climbing--the company projects revenue of at least $1 million in 2005. And if all goes to plan, Pinxav should be sold in Babies"R"Us and CVS before year's end.

A turning point came when Steiner was at a trade show in Chicago, pitching to some skeptical mothers. Pinxav had been a staple in the Midwest since 1927, but the younger moms were pretty oblivious. And nobody could readily pronounce Pinxav. "Pink salve," Steiner explained.

The mothers weren't convinced that they should part with their money for a new-to-them product. "We have a money-back guarantee," said Steiner.

The women all but yawned.

Then Steiner had a burst of inspiration: "If you're not happy with the product, I will not only give you your money back--I'll buy you our competitors' product. I'll buy you whatever other brand you want."

Suddenly, the women were interested, and they all plunked down their money. None of the women ever took Steiner up on his offer. So Steiner decided to make it part of his business practice.

He isn't doing anything revolutionary--just tinkering with the well-established money-back guarantee. But that's the thing about innovation: You're often not reinventing the wheel--you're simply polishing it a little.

Steiner and Friedman plan to continue innovating via a more extensive product line--they're looking at the basic formula for Pinxav and figuring out how they can morph it into other products, possibly including a sunblock, since surfers have told Steiner that they use the salve as sunscreen. Meanwhile, Steiner has set up the website so people can chat with him live about the product. He wants to stand out from the crowd, something entrepreneurs increasingly have to try to accomplish, says Dan Henson, president and CEO of Vendor Financial Services, a company within GE Commercial Finance that assists businesses.

"Innovation is playing a more crucial role than it ever has before," says Henson. "One of the reasons is that we're living in a global economy. There are more voices available than ever, so you have to set yourself apart. Innovation may be the latest buzzword, but whether you're offering a product or a service, the pressure to differentiate yourself from the competition has never been greater. Having your company say 'me, too' doesn't work very well anymore."

Innovative Products

When Mike Domek, 36, began Crystal Lake, Florida-based TicketsNow.com, there was no dotcom in the name; it was called the VIP Tour Co. Inc. It was 1992--Domek had dropped out after three years at Southern Illinois University, and he used $100 to buy office supplies and start his business as a self-employed ticket-broker. He worked out of his one-bedroom apartment for the first 18 months, until he became successful enough to move into a two-bedroom apartment.

In the beginning, Domek's company tapped a market that Ticketmaster had neglected: He specialized in locating and securing premium seating and tickets to sold-out events. By 1999, Domek already had a $7 million company, but it wasn't until he started TicketsNow.com that business truly took off. TicketsNow.com created software that would give the company a secure database of authentic secondary event tickets, allowing the company to succeed in a way it probably never would have--and certainly grow faster than it ever could have. And he's needed to keep it growing, now competing with companies including eBay, eSeats.com and National-Tickets.com.

Competitors ensure that entrepreneurs remain innovative, says MacDonald, who observes that today's entrepreneurs have numerous ways of starting businesses, from incubators to entrepreneurial grants. And what should be refreshing to those who are in situations similar to Domek's in his early days is that he built his business by following two basic rules that are as old as the business world: Find a niche, and listen to your customers.

"Innovation comes naturally when you're listening to your customers," concedes Domek, who in 2004 had a $55 million company and looks poised to be running a $100 million business before the year is over. "They tell you what you want, and you [find a way to] build it."

Where to Go for Help

Ready to make a difference? The SBA has numerous programs and resources for well-established and new entrepreneurs seeking advice and assistance. Just log on to www.sba.gov, and click on "All SBA Programs" on the upper left-hand corner of your screen. There you'll find an abundance of assistance, including these organizations: