The first step in a search engine optimization campaign is to choose your keywords or keyphrases for each of your web pages.  Keywords are the terms that search engine users type in the search box to conduct a query. The right keywords are those that:

1. clearly describe the purpose and content of your site, and,
2. allow your site to show up as close to the first results page as possible.

A good position doesn't depend only on your choice of keywords.  It also depends on how well do you position those keywords in your web page, and how many quality external pages link to you.  However, choosing the wrong keywords can throw off your entire search engine optimization strategy, so you need to invest a few hours and make sure you do it right.

Let's start with your homepage.  Look at it carefully and write down the words and phrases that best define your site.  Try to form two or three word phrases, since competition for one-word keyphrases is fierce, and it is virtually impossible to get a top position for them.  That is why, from now on, we will talk about keyphrases, not keywords.  Once you have developed your list of potential keyphrases you are ready for the next step: to analyze the demand and supply for those keyphrases, and choose the best ones (those with good demand and not enough supply).

We will first check the demand for your selected keyphrases. For this, we will go to Overture's Search Term Suggestion Tool:

http://inventory.overture.com/d/searchinventory/suggestion/  

Overture is a popular pay-per-click search engine.  You will then type each of the keyphrases you selected, and see how many people search for those terms. This tool will show you only those searches conducted in Overture (and only in one month time).   However, the relative popularity of each search term will be very similar in other search engines as well.  In addition to telling you if your selected keyphrases are popular, this tool will show you other keyphrases that you may not have thought about, which may even be more relevant to your site. 

For example, if your first keyphrase was "Italian Restaurant", the Search Term Suggestion Tool will also display other popular search terms, like: "Gourmet Italian Restaurant", "Northern Italian Restaurant", "Italian Restaurant Pizzeria", "Italian Restaurant Miami", etc.  You may also try other keyphrases, for example: "Italian Cuisine", and come up with more specific keyphrases, like: "Fine Italian Cuisine", "Italian Cuisine Miami", "Northern Italian Cuisine", "Italian Cuisine Fine Dining", "Gourmet Italian Cuisine", etc.

What you have done is to validate and enlarge your pool of popular, in-demand, potential keyphrases for your web page. The next step is to check the supply, or, in other words, to see how much competition there is for your selected keywords.  Naturally, you want to focus on keyphrases where competition is less fierce. For example, choosing "Italian Restaurant" alone will certainly hurt you.  There are so many of them that your chances of showing up in an advantageous position within the search results are pretty slim. 

Having said that, get your list of keyphrases, go to Google ( http://www.google.com/  ) and type-in each of them in the search box.  Enter your keyphrases within quotation marks (to filter-out less relevant results), and see how many results each individual query produces, making a note of those with a relatively small number of results (less competition). You will stick with the keyphrase that:

1. Best describes the topic and content of your page
2. Is a popular search term according to Overture's Search Term Suggestion Tool.
3. Generates a relatively small number of results after performing the Google search.

If "Gourmet Italian Restaurant" is the keyphrase that best meets these three criteria, it will become your primary keyphrase. To get even better results, you can choose a second keyphrase to make your page more relevant to an even more specific niche. For example, if your restaurant is in Miami, you can consider "Miami" a second keyphrase.  Once you have chosen the keyphrases for you homepage, do the same for the other pages on your site.