In your normal business day, do you spend more time looking for ways to do the minimum or the maximum?

Take these examples:

Of the people in the left and right columns, who do you think is going to:

• get the promotion?
• win repeat business from their clients?
• find new customers through positive word of mouth?
• sell more product?
• have the most engaged staff?
• WIN?

It’s not rocket science. If you aren’t getting the results you want, next time you notice yourself asking “what is the minimum I need to do?”, stop and take a moment to think about the possibilities if you asked “what is the maximum I could do?”

I recently finished reading one of the best books I have ever read, The Big Short by Michael Lewis.

Lewis wrote his first book, Liar’s Poker, in 1989 when he was in his 20’s, and this was one of the few books that almost all of my finance industry colleagues had read. (Although people took very different things out of the book, which was a particular frustration for Lewis who meant it as a tale of caution rather than a how-to guide).

The Big Short is a brilliant account of what we now know as the “GFC”, seen from the perspective of some key hedge fund managers that saw what was coming and took big bets against the conventional wisdom at the time… and made enormous sums doing it. To them it seemed so obvious that what was happening was unsustainable, yet so many thought otherwise that they often felt they must be wrong, stupid, or both.

The book combines an amazingly understandable explanation of some extrememly complex financial transactions, with the character development and suspense of a great thriller – not an easy thing to do!

I cannot recommend this book enough, and have told people ranging from past investment colleagues through to my Dad, that it is worth reading.

You can get it shipped free from my favorite online bookstore, The Book Depository, or if you need it today and don’t care about price, at all local bookstores.

Trust me, you won’t regret reading this book.

We are human, and that means we are not perfect in our decision making.  Far from it, in fact.  One area that we often make irrational decisions is around the value of time.

Take this experiment, for example:

1. You are shopping for a shirt that costs $50, and you hear that it is available at a shop 15 minutes away that is having a 50% off sale, making the shirt $25.  Will you drive to buy it?
2. You are shopping for a suit that costs $1,950, and you hear that it is available at a shop 15 minutes away that is having a 1.3% off sale, making the suit $1,925.  Will you drive to buy it?

Most people answer “yes” to question A, but “no” to question B, even though the outcome is exactly the same: a 15 minute drive to save $25.

This example is an easy one to calculate, so there is no excuse for confusion.  Yet most of us still make an irrational decision and provide a different answer to questions A and B.  Even after we are shown how irrational it is, many will still do the same thing again.  So imagine how bad our decision making is on complex problems where the comparison isn’t so obvious!

So we know that the rational thing to do is to answer “yes” to both questions or “no” to both questions, but not a different answer to each.  Whether you choose “yes” or “no” should depend on how you value your time.  What is worth more to you: the 15 minutes or the $25?

One of my favorite sayings, although I can’t recall the origin, is “Linux is the cheapest operating system in the world… if you value your time at zero”. As most will know Linux is free, but the quote implies that you will spend more time setting up and managing a Linux system than other operating systems, so it is far from the “cheapest” option for everyone.

The rational question to ask next is “how much time are we talking about, and how much is my time worth?”, and only then can we decide whether Linux is still the cheapest option for us.  If it takes two hours to set-up and you value your time at $10 an hour, Linux is still much cheaper than Windows.  If it takes ten hours, and you value your time at $200 an hour, that’s a different story!

These are just two examples of where having some understanding of the value of your time can be of benefit to you and improve your decision making.  Not many people I know, however, actually think about what their time is worth to them.

Here is my suggestion as to how you can start conciously making decisions about the value of your time which, up until now, were probably being made subconciously (and poorly!):

• Imagine if a magic genie came to you and offered to extend your days to 25 hours and the extra hour was yours to do whatever you want without any interuption, feelings of guilt or cost to other aspects of your life. So you could spend time with the kids, play video games without interuption, sit and watch the football and drink beer, or go shopping.  What is the maximum you would pay for this bonus hour each day?
• If your boss asked to work an extra hour each day, doing only the most menial task and which has no redeeming value other than the pay you will receive (ie. it’s not fun, educational, benefitting your career, hleping others, etc), what is the minimum you would need to be paid to work this additional hour?

Hopefully you have picked an answer for both questions, and they are not too different to each other.  (However, if you are like most people, you probably picked a higher number for B than A, even though the outcome is the same – one extra hour a day for a set amount of money.  The reason for this is most people put a higher value on dollars they already own and which they stand to lose, or payout, over dollars that they stand to receive.)

Now average the two numbers you picked.  This is a good estimate of how you value your time.

This number will be different depending on your current circumstances.  If you are working 60 hours a week and getting paid $200,000 a year, you would probably pay a lot for an extra hour each day, and it would take a lot to get you to work an extra hour each day doing a menial task.  A value of $200 an hour, or more, is not out of the question.  On the other hand, if you are not working at all and don’t have any income, an extra hour each day is not that valuable to you and you could probably do with a bit of work, so $35 an hour may suffice.

So why is it so important to think about this?  We make decisions every day that could be improved by thinking conciously about things which, until now, we left to our subconcious, and in doing this we can turn a few irrational decisions into rational ones.  “Should I do this task or give it to one of my team?”;  “Should I outsource this role to someone else?”;  “Should I drive further to buy a product that is on sale or buy it locally and use that time for something more valuable or fun?”;  “How much is it really costing me to spend one more hour in this online video game?”;  “Should I pay a consultant to do this for me or try to do it myself?”;  “Is that free software really a better option for me than the paid alternative?”

Further Reading

The science behind our behaviour and decision making is something that has interested me for years, firstly in understanding how it impacted investment decision making in my previous role, and now how it affects the decisions of small business owners, clients, staff, marketers, etc.  If you want to do more reading on the topic, here are some of my favorite books. There are also some blog posts and videos in the Articles section, including a great video of Dan Ariely at TED asking Are we in control of our own decisions?.

I am surprised at how few small business owners do any kind of financial forecasting given how valuable a tool it is.  I am given many reasons as to why this is, but most often it is: “I’ve tried, but my industry is too uncertain and my forecasts are always wrong, so there is no value in it and I have better things to do with my time”.

My answer to this is simple - almost every forecast in business will be wrong, but that is no reason not to do any forecasting.  In fact, incorrect forecasts are the best kind!

Let’s look at two business owners, and you tell me which one benefits more from the exercise of doing some basic forecasts:

Jessica sits down and prepares a forecast for next quarter.  She forecasts that sale will increase to $120,000, and expenses will increase to $80,000 due to an increse in her rent but a small saving from one staff member cutting back to 4 days per week.  At the end of the quarter she reviews her forecasts and, no surprise to Jessica, her forecasts are almost exactly correct.

At the same time Steve was also doing his forecasts.  He also forecast $120,000 of revenue for his business, and $80,000 in costs.  At the end of the quarter he found his revenue was $20,000 below forecast, and his expenses were $5,000 above.  He looked into why, and found a whole lot of issues:  he forgot that this quarter was notoriously quiet for his industry; he had another debt go bad; he had a staff member take long service leave; and, he had to retrench another staff member which involved a sizeable payout.

Jessica was almost exactly correct, while Steve was very wrong.  If forecasting is only worth doing when you are likely to be right, Jessica would keep at it while Steve would give up.  Yet I hope that it is clear to everyone that Steve benefitted substantially more than Jessica did from this exercise.

Jessica learned almost nothing, but reconfirmed what she already knew – that her industry is relatively predictable and she is good at forecasting.

Steve, on the other hand, learned:

• his industry has peaks and troughs during the year that he should know are coming, if not the exact size of them, and he should take this into account when planning for his business (production levels, spending, staffing etc.);
• while he can’t know which debts will turn bad, he has a history of bad debts and he should factor in some allowance for bad debts each quarter.  Sometimes his guess will be too high, and sometimes too low, but over time it will roughly average out – and its better to plan for some bad debts and be get a postive surprise if there are none than plan for no bad debts and have to find a way to deal with them if they do occur;
• he can’t predict when staff will take leave too far into the future, but he can ask his staff to give ample notice and factor this into short term forecasts, and put some allowance for it in the long term forecasts.
• occassionally he will have to let staff go, and he should allow something for this in the forecasts otherwise staff turnover will always be a negative surprise.

Steve, although he was quite wrong with his forecasts for the quarter, learned a lot more than Jessica.  When he prepares his forecasts for next quarter he will do a much better job, and better again the quarter after that and so on.  Even though Steve is operating in a volatile industry, even forecasts that end up being very wrong are teaching him a lot about his business.

Finally, some tips if you want to improve your forecasting:

• Forget about getting every single forecast right and accept that they will all be wrong. The goal is to get them right on average over time.  The process of continually improving your forecasts will teach you enormous amounts about your business and impove the way you manage it.
• Detailed forecasts are better than high level forecasts, even though you will be getting more individual numbers wrong.  For example, instead of forecasting sales revenue try forecasting sales volume by customer or division, and pricing by customer or division.  Instead of getting one number (sales revenue) wrong you will get dozens of numbers wrong… but the resulting forcast of sales revenue (ie. the end goal) will be less wrong by having gone through the exercise.  Plus, when your actual results come in you can see which component you got most wrong and work on correcting that part of your business first.
• Make sure that you dedicate time to analysing why your actual results were different to your forecasts.  As we saw above, this is how you get most benefit from your forecasts, learn about your business, and improve your forecasting over time.
• if you cannot bear the idea of being wrong in every number you forecast, try doing best/worst case scenarios instead of single point forecasts (with the likely case falling in between).  You will get all the benefits of preparing the forecast, but not be disheartened when your numbers are wrong (unless they come in way outside your best/worst case range – so start with a very wide range so this is less likely to happen!).  In many ways forecasting this way is better than single point forecasts because it also makes you think about the volatility and risk in your forecasts, not just the most likely outcome. Understanding that is a great thing.

I’ve never put together a list of the biggest problems across most small businesses, but if I did the abundance of short-term thinking would be very close to the top of the list.

Short-termism

The release of the results of a recent survey conducted by the Australian Institute of Managers showed that a significant number of corporate executives were worried that “short-termism” was severely impacting the performance of their business:

The global financial crisis is the time when companies should show they’ve learnt from the mistakes of the past, shun short-termism and focus on building long term competitive advantage,

..the CEO of the Australian Institute of Management (Vic/Tas), Ms Susan Heron said….

Companies should ensure they have the business basics right – strategy, cash flow, debt management and investing in their people to build and retain the critical skill sets necessary for long term growth.

You can read more in the AIM press release.

The Death Spiral

In a recent blog post by Seth Godin titled Death Spiral, he talks about the trap that businesses fall into of trying to save money when things are going wrong, which only exacerbates the problem and leads to the death of the company:

The doctor has fewer patients so he doesn’t invest as much in training or staff and so some other patients choose to leave which means that there are even fewer patients…

The newspaper has fewer advertisers, so they can’t invest as much in running stories, so people stop reading it, which means advertisers have less reason to advertise which leaves less money for stories…

What is the answer? I’m sure that when talking about other people’s businesses that most of us can clearly see what it is. However, when it’s our business and we are in the middle of such a situation we do not always look at things objectively and may need to be reminded of what needs to be done.

In Seth’s words:

Right this minute, you still have some cash, some customers, some momentum… Instead of squandering it in a long, slow, death spiral, do something else. Buy a new platform. Move. Find new products for the customers that still trust you.

Change is a bear, but it’s better than death.

A Few Ideas

The focus on the short term usually results in the business being starved of two things: time and money.

Many small business owners will call me crazy for suggesting they need to spend more time on their business. However, to use the language of the popular small business book, The E-Myth, there is a huge difference between working on your business and working in it. Too much focus on the short term usually means spending more time working in the business, however if the problems are related to, say, customers no longer wanting the product that you are offering, then working harder to produce more of that product is unlikely to help greatly.

Instead of just doing more of the same, try allocating time to consider issues such as:

• Why are you the best option available for your clients, and how are you making sure your clients know that;
• If you’re not the best option for your clients, what are you doing to change that in order to give your clients have a compelling reason to buy from you;
• What are you doing to attract and keep the best staff, because the best businesses are rarely built with below average staff;
• How profitable are each of your clients to your business, and are you spending an appropriate amount of time working for each of them.

The other important resource that business owners often withhold from their business is money. Conserving cash seems like a smart thing to do, particularly when economic conditions are tough, and often it is the right thing to do. However, many small business people take this too far and stop spending money on projects that make sense. Worse still, they usually do this at the very time the business needs it most.

Some examples of projects that may make sense, particularly when times are tough, include:

• Hiring an assistant to take the load off your higher paid staff, in turn freeing them up to better serve your clients.
• Investing in some new software that could make life easier and more productive for your staff.
• When hiring new staff, be generous with salary and benefits in order to attract the best person for the job. In the long term this will be a better option than saving a few thousand dollars now, but ending up with with a team member that doesn’t work out.

An Offer From Me

If you, or someone you know, is in the position of running a company that is heading into something similar to a death spiral, you should have someone independent you can talk to. Very few people are able to make objective decisions when put in this situation. If things have reached the point where you can’t even afford to pay for some decent advice, please consider contacting me and we can find a couple of hours to talk through the issues. In just a couple of hours I can’t promise the world, however I know what it’s like to be in a similar situation and it would give me great pleasure to help someone else by providing some fresh ideas and an objective point of view.

I don’t normally post gadget and technology news, but I think this news is worth me changing that policy. In the last couple of days Google announced and demonstrated their latest toy, and this time it’s a big one even by Google’s standards. It’s called Google Wave, and it is likely to be the biggest change to the way we use the internet in years – and that may be an understatement.

The Sydney based team within Google that created Wave started with the question “if email was invented today, how would it look”. What they’ve come up with is something that will significantly change, if not replace, all of the following: email, instant messaging, document collaboration, photo sharing, Twitter, Facebook, discussion forums and blogging… just to name a few.

The way they’re doing this is not by inventing a new application, but a whole new protocol. And better still, while they are building their own (browser based) tools to use this protocol, the protocol will be open source and they’re encouraging others to build their own tools. And to make this process easier they’re even open sourcing their tool, meaning you can start with a fully functioning application and just changing it where you think changes are necessary rather than having to start with a blank sheet of paper. They’re also opening up the API and encouraging developers to build add-ons to increase it’s functionality.

Phew, lot’s of stuff there. But that’s really only the start. The video demonstration embedded below is long at 1 hour and 20 mins, but it is seriously worth watching if you want to see how the internet will undoubtedly start changing when Wave is released later this year.

Just think – Twitter is just starting to change how some people use the internet after a couple of years, and the majority of people still don’t “get” Twitter. Facebook has changed the way many people use the internet, but it has taken many years to reach it’s current level of mainstream acceptance and for developers to build some really interesting add-ons for it. In other words, in the early days of a technology we generally underestimate the impact it will have because it takes time for people to think of new and interesting uses for that technology (even the internet itself followe this rule). Now, with that in mind, take a tool that has the whole internet buzzing like I’ve rarely seen before only days after its announcement, and try to imagine what it could mean for us in two or three years given even all of this hype is probably still massively underestimating what impact it will have. This is pretty cool.

So, for those that can find the time, enjoy…

Too few small businesses have a current business plan, often due to a belief in one or more of the following myths. By dispelling some of these myths, I hope that a few small business owners will decide that now is the time to write a business plan and it will quickly become one of their most valuable management tools.

Myth #1: Business plans have to be long, detailed and well presented.

Reality: If you have plenty of time and you like working this way, go for it. However, for most of us it is preferable to keep them short and without much formatting. This is because a business plan should be checked and updated often, and having an overly complex business plan is likely to discourage you from doing this and lead to it getting forgotten in a draw somewhere rather than as a key document that helps you run your business.

Myth #2:  There is a right and wrong way to write a business plan.

Reality:  The most common reason I hear for not having a business plan is “I don’t know how to write one”. There is no business plan rules committee telling you what you can and can’t put in your business plan. It’s your plan, so write what you want to write! Over time you can improve your plan by learning about what others do, however if the only thing stopping you from writing a business plan today is not knowing what to write then just start writing something… anything… and worry about improving it later. Even a couple of paragraphs detailing why your business exists and one or two goals for the future is a great start and can be built on as new ideas come to mind.

Myth #3:  Business plans are really for other people to read, so if no one is asking to see yours then you don’t need one.

Reality: There are many people that may ask to see your business plan – banks, clients, business partners, etc. So go ahead an prepare something for them and call it a business plan if you like. However, you should always have a business plan that is only for the owners of the business to see, for reasons which will become clearer when we look at myth #4.

Myth #4:  You business plan should show your company in its best light.

Reality: If your bank or a customer asks to see your business plan, go ahead and give them a version of your business plan that shows your company in a good light. (In effect, give them a detailed marketing document which is titled “Business Plan”). However, you should always have a business plan that discusses all the negatives in your business – your weaknesses, the strengths of your competitors, the threats to your business, etc. Admitting to these issues and putting them in writing will get you one step closer to addressing them and that is clearly a better strategy than ignoring them and hoping they will just fix themselves.

Myth #5:  Once you have a business plan you should stick to it.

Reality: I often hear people say “If I have a business plan that I stick to I cannot be flexible, while if I have a business plan I don’t stick to then it serves no purpose… so what’s the use!”. There is a very good reason, and that is because you can use the business plan like this: stick to your business plan until you don’t want to and then don’t, but make sure that when you do deviate from the business plan that it is a conscious decision rather than something that just happens without much thought. By consciously deciding to deviate from your plan you are saying to yourself “my new plan of action is better than the one outlined in my business plan, and I would rather do this”, in which case you absolutely should go ahead and follow your new plan of action. You should then follow this up by finding a few moments to quickly update your business plan (which will be easy if you followed tip #1) to reflect your new and improved thinking. Now, for every major decision you have two choices:  either reject the new idea because it conflicts with your business plan and then congratulate yourself for having a plan that helped you make a good business decision; or, take the new path, update your business plan, and congratulate yourself on having further improved your business plan. Either way you win!

Every business should have this goal: be the best in your market.

Luckily this is not as hard as it sounds.  After all, you get to decide what your market is, from as large as the whole world to as small a niche with only a handful of customers.  Also, not everyone’s definition of “the best” is the same, as everyone places different values on price, quality, prestige, backup-service, risk, etc.

Too often I hear people say something along the lines of “I only need 0.1% of the market to make good money”.  Yes, this is good place to start and is obviously better than needing a 20% market share to make a profit.  However, you won’t even get 0.1% of the market buying from you unless you can convince some portion of the market that you are their best option given their specific set of circumstances.

Let me explain further…

Several years ago I had an ankle injury that required surgery. I asked around and chose a surgeon who I was told was “the best ankle guy in Melbourne”.

I also have many friends that have had work done by orthopaedic surgeons to repair a range of sports injuries. Without exception they enjoy talking about which surgeon they used as if it is some form of status symbol. There is pride in having someone recognise the name of your surgeon and having them proclaim “I know him… he’s good”.

Strangely, I have also heard other ankle specialists described as “the best ankle guy in Melbourne”. The point is not which one is actually the best, but that they are all doing well because at least some portion of the market regards them as the best.

However, I have never heard anyone say that they chose their orthopaedic surgeon because “they will work on anything you need fixed”.
The lesson is simple: People want the best for their specific situation, not the most versatile¹.

So why is it that so many small businesses think the answer to their troubles is to expand their product range?

I think it’s simple…

The number of customers your business has is a function of two things:

1. the size of your target market; and
2. your success rate in turning target customers into actual customers.

A target market of 1,000 people and a success rate of 1% equates to 10 customers for your business.

The reason that struggling businesses consistently look to increase their product range is that it increases their target market, and it is substantially easier to expand your target market than it is to improve your success rate. After all, expanding your target market involves nothing more than proclaiming, even if only to yourself, what your new target market is. That’s it, done! This sure beats all the work involved in coming up with new ideas or making real improvements to your business that will increase the rate of success that you have within your existing market.

However, in doing this you are becoming less of a specialist and less likely to be regarded as the best at anything. Therefore, any gains you planned (hoped?) to make by increasing your target market are offset by a further worsening in your success rate. You are becoming the orthopaedic surgeon that can do work on any limb and theoretically has a huge target market, but sits there doing nothing² while all the ankle and knee and shoulder experts have six week wait lists and can charge whatever they like.
Try this exercise:

• Start with a list of your current target market – that is, all of your potential customers across all of your product lines (goods and services).
• Next, start removing the products where you are least skilled, least interested in, or which you feel have the least potential.
• Finally, take some potential customers from your list, starting with those who are least likely to buy from you, pay the price you want or who you know would really be better served by buying from someone else.

What you now have is a range of high quality products that you like and feel have potential, and a group of potential buyers that are open to buying from you at your chosen price and who you genuinely believe would benefit from being your customer.

Now ask yourself three questions:

1. Can you actually deliver the small range of high quality products that remain on your list?
2. Can you visualise your target clients buying from you and then telling their friends that they should use you because you’re the best [insert your product here] guy/girl in Melbourne?
3. Can you make money from only serving this niche (even if it requires a substantially higher success rate than you currently are achieving)?

If you answered “yes” to each of these questions, you have a market niche worth pursuing. If done right, you’ll have a business worthy of others talking about, and a decent chance of becoming known to at least some people as the go-to person in your market.

So what’s your next step – increasing the size of your target market or shrinking it?
1. In some cases versatility can be of benefit to a customer, but only where it involves areas that the customer has some interest. In the majority of cases the versatility is for the benefit of the business owner, not the customer, and therefore does very little to improve sales.

2. They’re not really doing ‘nothing’… they’re probably busy thinking about how to expand their services even wider because their problem is they can ‘only’ do orthopaedic surgery.

Thanks: I need to give credit Seth Godin who’s constantly great writing inspired some ideas in this post.

I thought I’d provide a free ad for a great online bookstore that I’ve been using for the last few months and have recommended to a few friends – The Book Depository. I also thought I’d add some thoughts on why I like them from a business point of view.

They are a UK based, online book store, and their business model is very simple… after all, the idea of an online bookstore is nothing new. Here are the reasons why I like them:

1. Their prices are outstanding. In fact, they are so proud of their prices that they provide a direct link for all of their books to the same book on Amazon UK, making it easy to go to Amazon if their price is better.

Lesson: Don’t rely on customer’s lack of knowledge about better options to make yourself look good… actually be the best, and actively encourage comparison shopping so that customers will see that.

2. They have great customer service. I haven’t had any reason to contact them as all 10+ books I have bought were simple transactions with no problems, but a friend made a mistake with her address and had to contact them to correct it. She said that the email based customer service was quick and very friendly.

Lesson: Being the cheapest does not mean you can forget about customer service. One bad experience and a customer will decide they can afford to pay a little extra to get better service elsewhere… and worse still, will tell their friends which will cost you several customers.

3. They have free worldwide shipping. They don’t make you search for links with well hidden explanations of their shipping prices or make you go through 90% of the checkout process to find out how much you’re up for. Even better, you won’t find that their low headline price is subsidised by ridiculously high shipping charges. They simply do not charge for shipping (to 100 countries at least).

Lesson: Don’t play games with pricing, such as subsidising low headline prices with high shipping charges or other semi-hidden costs. Once a customer has decided to buy your goods/service at your headline price, include as much as possible for that price as you can and only charge extra where absolutely necessary. Use those little extras as a way to provide a positive surprise by not charging for them rather than jumping on the opportunity to squeeze a few more dollars out of your customer and giving them a reason to regret their decision or back out of the transaction completely if they still have the chance.

4. The books I ordered were all delivered within 4-6 business days. Also, most were shipped separately even when ordered together, so they didn’t wait until they had all the books ready to ship together in order to save themselves some shipping. This compares to the 7-14 business days they quote on their site, which is also about the time that Amazon in the US take to ship to Australia.

Lesson: under-promise and over-deliver. Every book I received was a positive surprise when I went to the mailbox as I had mentally prepared myself to be waiting a couple of weeks for delivery. Positive surprises are good and will make customers talk (and blog!) about you.

If you want to see just how cheap they are, there is a great site for comparing prices on books for online purchase and delivery to Australian addresses called Booko. Here are links to a couple of price comparisons on Booko. They are for two books – one we’ve recently read in my PMBA group and another we’ll possibly read some time this year – and show you how much cheaper they are from the Book Depository. Not all price differences are this large so use this site to try a few books of your own:

Made to Stick
Small is the New Big

UPDATE: As an alternative to reading the whole post, here is a video that runs less than four minutes and does a good job of explaining RSS. You can then scan through the rest of my article to learn more.

The free tool that I use far more than any other is Google Reader. While there are many RSS readers available, Google Reader is free, has as simple interface like most Google products, and as most of us now have Google ID’s (for Gmail, Calendar, etc) we don’t have to sign up to yet another site to use it.

Firstly, what is RSS?

RSS stands for Really Simple Syndication, and is the most popular format for syndicating web based content. This leads to the obvious question of …

…What is syndication?

It is a method for converting web based content into a standard format (which by itself is not very pretty as you can see if you follow this link to one of my feeds) that can be read by a large number of “feed readers”. These readers can either be a web site like Google Reader, integrated into the browser or email client, or even in other places like mobile phones.

The reason why syndication is so useful to you is that it allows you to access content in a way this is more flexible, and thus more convenient to you. Almost all blogs, news sites and most other websites that regularly publish new content will have a “feed” of that content which can then be read by any feed reader. If you’re only interested in following one website this doesn’t help much (unless, say, you want to follow it on your phone), however if you visit a number of sites this can save an enormous amount of time. How? You can use the reader to aggregate content from many sites into one place instead of having to visit each site individually – which is why feed readers are often known as “aggregators”.

How do I get started?

The best way to learn how to set up and use Google Reader is to watch the two minute video at the YouTube’s Google Reader Help Page. It really is very simple, I promise!

As you’ll see in the video, the first step is to head to Google Reader and sign in using your Google ID (if you’re not already signed in to use Gmail, etc). Then you can start adding feeds. You can do this three ways:

• Use the “add a subscription” button just below the Google Reader logo to search for feeds on your favorite sites or topics;
• Look for a link* to a feed on the site you want to follow, then copy the URL attached to that link and paste it into the “add a subscription” search box in Google Reader; or
• If you use Firefox, simply click on the link to a feed on the site you want to follow and follow the instructions. Other browsers will act differently so I won’t go into detail about using this method here.

* To find a link to an RSS feed, visit the site you want to follow and look around the site, or in your browsers address bar, for icons that look like  or . These icons will be the links to the site’s feed. Many sites will have more than one feed – for example, The Age has feeds for its tops stories, sport, entertainment, world, small business, technology, etc.

Is that all Google Reader can do?

No, there’s lots more it can do such as allowing you to categories feeds and share, tag, email, and add notes to individual stories… however, I’ll leave you to discover all that for yourself.

Got any more tricks with RSS?

The ability to bring together content from a number of blogs onto one easy-to-read page is just the beginning. You can use RSS to gather all sorts of interesting content from the web. Here are some examples:

• To track news for any topic head to Google News and search for your chosen topic. The page showing the results of your search will have a feed that you can subscribe to. It’s just like having Google continually running that search for you and sending the results straight to your feed reader!
• If you want to track your topic across more than just news sites, create a Google Alert (as a “feed” using the drop down box) and subscribe to the feed it creates for you.
• To see what people are saying about any topic on Twitter you can do a search on Twitter Search and subscribe to the feed of the results.

This is just the beginning. Hopefully your next step is to get set up on Google Reader and subsribe to the feeds for my blog and myarticle list at Diigo.

Let me know how you go, and if you find any feeds worth following send me the link!