There are many types of directories including general directories and niche (often reffered to as vertical) directories. There are also many ways these can be structured.

The first step in planning to build a directory is deciding what it will be a directory of. You could choose to be general and have a vast array of categories and sub categories where a website on any topic can be submitted or you can choose to have a niche directory which are often reffered to as vertical directories. Vertical directories are becoming popular with users and webmasters due to the entire site and it's listings being related to one topic.

Your next choice is whether to have static pages and create each page manually or use a script that creates pages, manages your listings, site submissions and more. Using a script is the popular and sensible choice and if you have programming skills you may choose to build your own. Otherwise there are numerous directory scripts available and some are even free, for example: PHP Link Directory, Barracuda Links Directory or WSN Links to name a few.

Once you have your directory up and running with all the categories relevant to a general directory or your chosen topic the next task is get listings as without those it's not much. For other webmasters to submit their link they need to be able to find your site so getting links from 'directory of directories' sites are a good place to start in promoting your site. Although there may be catch, those sites may not want to list yours if it's not populated with listings to some extent so choose some quality sites and add them to your categories and sub categories.

For a start you may need to give free listings to get things going although there's something to watch in who you list on your directory which is summed up by quality attracts quality and trash does trash. Screen your listings and be sure they aren't banned by search engines,low quality sites, scrapper sites or just plain spam. The quality of your listings will reflect the quality of your directory to users, webmasters and to some extent search engines.

Your next choice once your directory starts to grow is how you will benefit from your work. Choices here can be running Pay Per Click advertising, banner ads, affiliate ads or charging for links or maybe both.

To get submissions from quality sites and maybe payment for links webmasters will be looking at or for Higher the Google PR the better, well keyworded title and category description, low density of links/listings per page and the quality of the other sites listed. Here is a neat trick, add top ranking sites under the appropriate categories and other sites trying to achieve top ranking for that particular keyword/category title will probably submit to have their site listed.

From there it is a matter of constantly promoting your directory via links to your site, advertising and marketing.