In the context of government appeal of “mass entrepreneurship and innovation”, all areas launched the movement of “mass entrepreneurship” and “grassroots entrepreneurship”. As parts of vitality of China’s market economy, small and medium sized private enterprises become grassroots of market competition in talents, funds, and technologies. This paper combined three levels of entrepreneurial spirit and small and medium sized private enterprises, studied acting mechanism of entrepreneurial spirit, discussed competitive power of small and medium sized private enterprises, and recommended that small and medium sized private enterprises should cultivate core competitive power, adapt to external environment, and create external environment support, to realize sound development.