I browse through yellow pages and directories. I look at their ad design as a first qualifier to see if they have an attractive ad, clear message and in general, if they're "up and up". I also check out their websites of course, because that is the most basic indicator of the class of work. I have to admit though, it's hard to find someone this way.

I also ask for referrals. I look at my vendors websites, my customers websites, and anyone else that I come across that has an attractive website. If I like their website, I ask who designs it for them. That helps.

Lastly, I ask my advertising agency/ graphic designer and anyone in the creative design business for referals. I find this to be the most effective way.

However, here's what I recommend from someone on the other side.
Follow up on referrals.
I find people don't call. For example, I like someone's website. I ask them who designed it. they're happy to tell me and said they'd call the desginer and have them give me a call. the designer wait weeks to call me. tells me they don't care much for new business. if someone gives you a lead, BE SURE TO FOLLOW UP ON IT IMMEDIATELY. if you don't, it reflects poorly on you and the referrer. they won't give out your name next time.

Make your website professional and your best work.
it's the first judge of your work. duh. if they don't like your site, they're not going to hire you to design their site. it should reflect what you offer, your class, your range, your style. make it tasteful.

Convey professionalism.
I'm always afraid to try anyone who I think is a fly by night operation. I want someone who's been around for a while, knows what they're doing, and will be around to continue to provide services for years to come. I hate shopping for new designers. Convey that implicitly. you've been around, you're going to be around. you're not some guy in a basement that can just do cool graphics.

Provide all around service.
be their website solution provider. help with hosting, domain registration, marketing, ecommerce, shopping cart, whatever it is that they need. be the e-solution for your clients. it's a much appreciated service.

Develop a niche market
I'm in the food business. I know people in the food business. I want a designer that understands food business. over time, we all end up using the same people. the advertising agency that I work with, 80% of their clients are food people. Over time, it becomes their expertise and makes it that much easier for them to get more food clients. People want you to understand their business, especially since an effective website HAS to tie into their core business needs and functions.

Save your money on banners, searches, sponsorships, and other things that cost money. Develop relationships. Cultivate referals. Be professional. Provide excellent service. If you just do this, you'll already be well above the crowd. and it doesn't cost you anything other than time and attention.