Michael Gray, AKA Gray Wolf, has started a series called Local Search Tips, Tricks & Secrets where he is interviewing 20 SEO experts about local search. He has already done four of them, with Aaron Wall (SEOBook), Dean Bloomfield, Bill Slawski, and Scott Smith.
Aaron Wall, in his interview, has some great advice for starting local search SEO:
Due to their trust and authority many of the large traditional business directories rank well across a broad array of local terms, and even for the official names of many local businesses. Before a local business spends money submitting to any of these business directories they should make sure they submit to the Yahoo! Directory, DMOZ, and get at least a few other links so they have enough link equity to outrank the general directories for their own brand specific searches, and hopefully some more general local ones as well.
and he continues by giving some detailed suggestions for where to find links…
To promote a local business one should get local links (like the local chamber of commerce, other affiliated local businesses, local government sites, donate to / sponsor local charities), links from general authorizes (news sites and large general directories like Yahoo! and DMOZ), and links from industry related authorities (like trade organizations, niche publications, niche blogs, and niche directories).
Keep up with the interviews of the list of experts to help with your local search SEO.