At this point, you can put some oil in the pan and get it heating up on medium heat. You don't need to completely cover the pancakes and deep-fry them. There should be enough oil for them to sit nicely in, though.

Next, grate them taters. Since I'm a poor recent college graduate, I just use a cheese grater. It works, but if you're doing a large batch, your arm may get very tired. My parents typically use a food processor with the grating attachment, but whatever works for you. Then crack an egg into the bowl and toss in a little flour.

You don't need much flour. Just enough to make the potatoes stick together. Add more if you want them more pancake-like, less if you want them more hash brown-like. Stir it all up until it's well mixed.  
 
 Step 3:

If your oil is ready, grab a nice-sized spoonful of the mixture.