According to a recent report, tens of thousands of ‘high growth potential' SMEs have shown early signs of financial vulnerability, despite being forecasted to achieve 20% growth in the coming year.

The inaugural Growth Flag Annual Report reveals that 13.1% of SMEs are poised for significant growth, but over 66,000 of these companies are also at risk of ever-increasing financial weakness.

The report suggests that identifying businesses with both high growth potential and signs of financial stress can enable targeted support from specialists.

While major cities host many potential growth businesses, the proportions are relatively small. For instance, only 6% of City of London firms fall into this category, while other cities such as Birmingham, Cardiff and Edinburgh are significantly below average.

In contrast, areas surrounding major cities, such as West Berkshire and Essex, tend to have greater proportions of businesses with higher growth potential.

In response to the report's findings, Richard Jeffery, co-founder of Growth Flag, emphasised the importance of understanding growth pockets when developing evidence-based business strategies.

The report also urged local authorities to identify businesses with both high growth potential and signs of financial difficulties:

"In the challenging economic context, picking up on signs of distress that may harm the chances of growth being realised and taking action could have transformational impacts in kickstarting broader growth in the economy."

Let us know if you're concerned about your business finances.