Finally, if numbers are showing the way towards the investment decision, it’s time to check the management. Small companies, which are not well established need a better management than large corporations. This is because with large corporations most important parts are already set up and the working style is ruled out. Customers, employees and other interested parties have a longer relationship with the company and are expected to tolerate some more “hiccups” then totally new ones. Still, a dumb management can destroy the best companies. I have worked for a dumb management and it is amazing to see what a good company with excellent products has to deal with, if it’s ruled by stupidity.
Does it matter if they are dumb?
In a successful company with very useful products, thus a lot of turnover and profit, it doesn’t matter so much. Many large companies are built in a “fool-proof” manner. Any idiot from the street could run these companies, because for every decision there is a double-check procedure. If the company is at risk, in a risky market or has a risky new product, it matters much more. Then a dumb management has a good chance to crash the company and shareholders (your!) money is gone, because the stock price goes to 0$ OR the license to trade is revoked by the stock market.