Read all literature on small caps!

Investing in small caps requires one to scratch beneath the surface with extensive research and due diligence. Since many small-cap companies operate in small and niche segments, thorough due diligence becomes imperative in understanding the company's financials, goals and growth trajectory. One must read the annual reports and investor calls of at least two years to understand the business, revenue mix, factors impacting top line and margins, competitive landscape, regulatory environment, management commentary and their actions.