Inflation jitters (and how to cope)

Professor Jeff Cornwall (and Entrepreneurial Mind blogger) notes that jitters regarding inflation are spooking the stock market -- and small business owners. "Many entrepreneurs have never had to do business in an age of inflation. In fact, the last bad inflationary period we had was almost thirty years ago. Since then, careful control of the economy with interest rate policy has helped to keep things in check," he notes. Here is some of his advice for coping with inflation:
· Keep overhead low.
· Build cash reserves to buffer short term price increases that precede higher prices on your part.
· Watch your margins carefully. Worry about growing profits, not sales.
· Don't lock into long-term contracts that have narrow margins with large customers.
· When inflation heats up even a little, be aggressive with frequent small price increases rather than waiting and trying to catch up at some point with one big jump.
· Pay down variable interest loans ASAP. As long as there is inflation, interest rates will keep going up.