First things first – Picking a Domain

The first step in creating a truly valuable directory is to pick a valuable domain. The following steps will serve as a good guide when selecting a domain.

1. Don’t use an expired domain just for PR (Pagerank). This is obviously not a wise decision since it is known that most times this PR will be gone by the next update. It also doesn’t add any value to your listings, since any incoming links from expired domains will not be related in any way to your business. On the other hand, if you find an expired domain that would be easy to remember and would suit your type of directory, by all means, pick it up.
2. Pick a domain that is relevant to your directory Too many times I see people use domains for directories that don’t relate to their directory whatsoever. For example, using www.fastredbicycles.com for a general directory would not be a good idea. Not only does it not add any SEO value, it turns customers and visitors off. Again, some do this because they already have the domain with PR and don’t have any other use for it. If you can’t splurge for a new domain, you don’t need to be in this (or any other) business.
3.Domains people remember = more business for you This is probably the most important piece of information to remember when selecting a directory domain. You want any submitters to submit more than once. That being said, if your domain is long and generally unlikely to have type-in visitors, your business will suffer.

Examples of good domains include, but not limited to:
Aviva Directory (http://www.avivadirectory.com)
Big Web Links (http://www.bigweblinks.com)
Alive Directory (http://www.alivedirectory.com)

Each one of these 3 (and there are many more, but people know these well) domains weren’t expired (not that I know of anyway :)), obviously relevant because of use of the words like “directory” and “links”, and are all easy to remember.

Second – Choosing a Directory Script OR Creating Your Own

After you have a domain, you have to do something with it. I am going to skip hosting, ftp, etc. assuming you already have an understanding of the Internet business enough to fend of yourself in these areas. The script you choose for your directory is very important.

By far and away, PHP Link Directory is the leading script in volume of directories using it. I would say 85% or more of the directories on the Internet use PHPLD. Popular choices include (but not limited to):

Directory Script and Price:
PHP Link Directory - (Free - $75)
eSyndiCat Pro - (Free - $149)
IndexU - (Free - $499)
Site Sift Listings – (Free - $59.99)
phpMyDirectory - ($99.95 - $499.50)
Free PHP Directory Script - (Free - $245.95)
IndexScript - (Free)

A lot of these scripts have free options that include less features and also require a link back from your directory to their software site. I would recommend NOT going with this option, as it makes your directory look unprofessional. That’s just my opinion. The higher end prices for these scripts are usually for multiple or unlimited domains, so don’t let the price scare you.

Personally, I would recommend going with PHPLD or Site-Sift Listings if you are new to the directory business. The reason is simple: accessibility. PHPLD has great support not only from the company but also from people who contribute mods (Modifications), designs, etc. These people are there to help and a lot of times their help doesn’t cost anything. Also, there are lots of free templates for PHPLD. Site-Sift doesn’t have as much of a following, but there are people who can help and this makes their script very appealing as well.

I may be a bit biased as I have never used some of the other scripts, so please do your own research. I put the links up so you may go and look for yourself. Pick your script based on your own needs and experience.

Develop your own
The second option when choosing a script is to create your own or have somebody develop one for you. Honestly, this isn’t going to be a good choice for most, since this can cost lots of money. But if you have the ability or means to do so… go for it! A middle ground is with scripts like PHPLD where you can have Mods created to change the script to make it unique. Magx Directory, as an example, is a hybrid between a “regular” directory and a bid directory and is made from PHPLD.

Bidding Directory Scripts
A new type of directory script available is for what people call “bidding directories.” These types of directories sort their listings by bid amount and allow people to choose their placement by how much they pay for their listing. Also, existing listings can update their listing by adding more funds.

The following are options if you are interested in these types of directories:
PHPLinkBid - $29.99
Link Bid Script - Free
PHPLD Bid for Position - Free

Third - Choosing a Design

This, to me, is probably one of the most important issues to consider when starting a new directory. Most people have heard the saying “Perception is Reality”. As an example, in real estate, people make their choice to buy a house somewhat based on the furniture or the arrangement of that furniture in the house. Even though people don’t buy the furniture, just the house, they still make a decision based on this variance. It’s about their perception of what their furniture would look like in the house.

The same goes for directories (or any other business for that matter). If you present your directory professionally, people, especially professional people with money, are going to think you are a professional and feel comfortable submitting their web sites and trusting you will promote them. Of course it is ideal for this to be the case. Even if you are professional and do plan on promoting your listings, a generic or “ugly” design gives the wrong impression, in turn losing possible business. So the moral of the story is to get a good design.

Getting a design - 3 ways
The next question is how do you do that? Well, there are a few ways. The first is to design it yourself. If this isn’t possible, there are three options. The first is to find a free template that has been sponsored by another directory or website owner and may be used by lots of other directories. I don’t usually recommend this. Again, the perception this gives is that the owner is cheap and doesn’t plan on promoting the site properly.

The second option is the buy a pre-made template. While this isn’t the best idea, it isn’t a bad one either. My directory (Magx) is based on a template I bought last year sometime, and it has been modified to fit my needs. As long as you can pay to have the footer links removed and plan on modifying the template to make it your own, buying a pre-made template is an OK idea. Other directories will use your design, but this will not happen as often as with a free template. In my experience, the costs for this option range anywhere from $10-$100.

The third and best choice is to have a template designed especially for you. Most of the prominent directories on the internet have chosen this route and for good reason. In my experience, the costs for this option range anywhere from $100 - >$1000. Some of the best designers hang out at Digital Points Forums.

Some useful links for researching designers:

Thread 1
Thread 2
Thread 3

Category creation
I will include category creation in the design section of this guide since the two are closely related. There are dumps for categories for directories on the internet and in forums. DON’T use these! They send a red flag to search engines that you have duplicate content on your site. Take the time to make a good range of categories and sub-categories. You can use DMOZ, DirectoryDump, etc. as a guide. They both have an excellent selection of categories. Don’t copy these sites, but look at what they have done and try and mimic it in your own way. The amount of categories you create is a personal choice. It’s best not to have lots of empty pages. This means you either need to wait until you get a submission to create a category or populate the categories yourself with quality sites. I recommend the second option. It’s time consuming and aggravating to do, but it creates quality that lasts. I struggle with doing this with my own directory. It’s important to understand this task is a work in progress.

Modifications
I am a strong believer in using Mods in your directory. These are ways of changing your directory to benefit submitters and visitors alike.
Mods for PHPLD:
Deeplink Mod (an0n): $100
Daily Listing Mod (Forplex): $75 plus optional $25 for installation.
The are other mods that are useful and more will be added to this page at a later date.

Forth - Promotion

Promotion of your directory is when you start actually seeing a return from all your hard work. If you have decided to make your directory paid (which I recommend doing), you can actually start recycling money so that alll money spent on promotion isn’t out of pocket.

Submitting directories to directories - trading money and paying fees.
The first part of promotion should be getting your directory listed in other directories. The nature of this business is that sometimes directory owners just pass money around to each other for links in directories, while really accomplishing nothing more than getting links and paying paypal fees. This seems stupid at times, but it is necessary. If you can find people to exchange links with you, that is great. If not, submit to directories and after enough promotion, these directories will submit to your directory.

The real money is made when non-directory related webmasters start submitting their site to your directory on a regular basis. With that being said, the best directories to submit your site is a toss up. If you ask 10 different people, you will probably get 10 different answers.

I personally recommend taking a look at Aviva Directory’s list of the Strongest Directories. This will give you an idea of where you need to start.

It is best to start a project with money you plan on using for promotion. If you don’t, it makes promotion an uphill battle. It’s not impossible to create a quality directory with no money. It just takes more hours of promotion and months of linkbuilding.

PR hype:
No matter how many links and traffic you get to your site, some webmasters are not going to submit their site to your directory until you have pagerank. People use toolbar pagerank as their “end all” of where to submit. Google has said that pagerank and strength of a site is constantly changing. As an example, a PR7 site that has been abandoned and will eventually fall to PR4 is far less powerful than a PR0 site that is being promoted like crazy and will get a PR6 the next update. The best idea is the use Yahoo, Google, etc. to research links and the amount of indexed pages.

This is not to say PR is not important. It just shouldn’t be the deciding factor when selecting which directories in which to submit your site. That is why I like Aviva’s guide to directories. They take a number of factors into consideration when choosing who is the “strongest.”

Advertisement - Getting webmaster traffic
Submitting your directory to other directories is a good way to build links and hopefully build traffic from search engines.

The next step in promoting your directory is to get traffic that will result in sales. This is something that is just begun for Magx Directory. For the last year or so, I have worked on getting quality links and building SE traffic to my directory. Now I am working on getting more sites submitted so that I may promote my directory even more. This should be the second step. Get buyers to your site.

It is important you offer more than just a link to your submitters. Sometimes, all people want is the SEO value of a link, but it is always good to give them traffic as well. This isn’t always possible, but it is best case scenario and should the be goal of any directory owner. If a directory only gets webmaster traffic, somebody submitting a site about flowers will not get any value from these visitors. They only receive SEO benefits. One is good, but offering both will make a lot customers happy and you a lot of money.

Ways to get webmaster traffic
The first option that comes to mind are forums. There are lots of webmaster forums on the internet and they include lots of webmasters. SitePoint and Digital Point are two examples. There are many more. These forums are good places to advertise your directory in your signature as well as buying signatures from other members. Also, there are usually subforums on these sites that allow you to advertise your site. Use this resource. There is no better traffic than from forums in my experience. (Note: Be sure and read the TOS of any forum before posting or buying signatures. Breaking rules is not cool)

Other options to build traffic and build your brand:
Press Releases (PRWeb)
Article Submission (Ezine Articles)
Buying blog posts (Payperpost)
Link Bait
Social Sites (Digg)

Last - Customer service

This one is a biggie. It is all personal preference as to how you treat customer complaints, problems, etc. If a person is truly unhappy with the service they received, I recommend issuing a refund. This can help build a reputation of professionalism and tell people you run a business, not a hobby. One angry customer can cost you thousands of dollars if they complain to all their webmaster buddies. Refund $50 and you may get a happy person who makes you thousands of dollars because they complemented you to all of their webmaster buddies.

Fraudulent charge backs are another issue and I don’t think these people should be given anything, other than maybe an indictment. Tell everyone when somebody does charge backs for no reason so they can be brought out into the open.

Closing thoughts

The directory market is flooded with volume. Sadly, the market is not flooded with quality. Don’t get me wrong, there are lots of great directories offering superior service. But there could be a lot more.

If you don’t plan on fulfilling your customer’s needs, don’t get into the directory business. It gives everybody else a bad name.

It is best to have funds to start your directory right. The first few months is important in creating a name for yourself. Financially, I would say a best case scenario for starting a directory would be as follows:

Script: ~$100
Design: ~$500
Mods: ~$400
Promotion: ~$10,000

Total: ~$11,000

Spending this type of money will give you some quality as long as you make sure the content of your listings is quality as well. There is no sure fire way to success and people promote in different ways (some of which don’t cost any $$).

One way to almost ensure success is to promote like crazy, always add quality listings, do your customers right, and treat your directory like a business, since that’s what it is.

I hope this helps some people who are just starting. Please post questions and I will answer the best I can or suggest changes and I will be sure and take them into consideration.