How to measure the health status of enterprises

How to measure the health of an enterprise? In recent years, I have been looking for answers. What should a healthy enterprise look like? To answer this question, we must first think, what is the purpose of healthy business operation? If people use metaphors, just as people need healthy bodies to live to 100 years old, so does the purpose of healthy enterprises. In the past, my understanding of this issue was to measure the health of an enterprise with financial indicators such as profit and annual growth rate. But last year, I studied Kaplan's "strategic map" and found that the financial indicators are lagging behind, which can only guarantee the health of the year, but not the health of the future. In other words, it is possible that this year's profit and growth rate have been completed very well, and next year's profit may decline or even lose money. Why? Just like a person's physical examination, today's physical examination results are normal, but there is no guarantee that the future will be normal. How can I be healthy tomorrow? Pay attention to diet and physical exercise. In other words, measuring the health of an enterprise requires several aspects, including results, processes, internal enterprises, external enterprises, financial enterprises and non-financial enterprises. What are the specific indicators? It was not until I read Malik's Correct Corporate Governance recently that I found a system to measure the health of enterprises, which includes six indicators: 1. Market positioning, that is, what is the positioning of your business/product in the market? Such as market share, popularity and customer satisfaction. How much is healthy? At least maintain a flexible market position. Every enterprise should determine its own market positioning according to the specific situation, and consider which elements can fully describe or reflect its own market positioning. Second, innovation performance A sign of innovation performance is the innovation rate, that is, what is the percentage of sales of products or services that do not exceed 3-5 years? Another indicator is the ratio of successful start-up of new projects to project failure. Just like the hematopoietic function of the human body, it is necessary to ensure the production of fresh blood. 3. Productivity mainly includes: labor productivity and capital productivity. Among them, the measures of labor productivity, such as per capita profit and per capita sales, etc. Capital productivity such as capital turnover rate, capital use cost, etc. 4. Attraction to Excellent Talents For an enterprise, what matters is not how many people have left the company, but who? If really outstanding talents start to leave the company, or it is difficult to find outstanding talents, it will send a dangerous signal. Measures such as brain drain rate and employment rate of outstanding talents. V. Ability to Pay and Liquidity As long as an enterprise maintains its ability to pay and liquidity, it can maintain it for a long time even if there is no profit, and vice versa. Profitability of intransitive verbs The profitability of individual enterprises and the whole enterprise. There are two main points in calculating the profitability of an enterprise: first, all special income and unique income or expenditure should be excluded from the evaluation of profitability; Second, the profitability must be calculated before allocating expenses. The evaluation period of profitability should be 3-4 years. Two key points in the application of this measurement system are: 1. An enterprise must not be evaluated according to a unique date or data, but must be compared, especially in structure and time period; 2. Every enterprise must design various indicators and corresponding health values according to its own situation. Take an enterprise I came into contact with as an example. During 2006-2009, XX enterprise achieved its annual profit target and maintained a certain growth. From the perspective of profitability alone, it should be a very healthy enterprise. However, if measured by the system, there are problems in market position, innovation performance and attractiveness to outstanding talents. This shows that the health of enterprises is problematic, that is to say, the profitability of enterprises will be problematic whether this year or next year, that is, profits will drop or even lose money. In fact, so far, there are indications that profits will decline to some extent.