Most of your potential clients are going to want references at the minimum and most likely want links to sites you've optimized.
Get some "experience" by offering to do free SEO for some local charities and non-profits. They will usually be greatful enough to put a blurb and link on their website, perhaps in their newsletter as well. That's a big prize as well since most of the newsletters goto business owners and are already sponored by them, so a positive review and "thanks" goes a LONG way. Not to mention, what sounds better... a reference from a contract plumber, or a childrens cancer charity... Just saying.. your doing a good thing, and it wlil pay dividends.
Also consider volunteering to optimize political campaigns and organization websites - for instance your counties young democrats/republicans, or their executive comittee. (Getting more official party work even if its on a volunteer basis will required you to be involved, but unofficial political organizations will be open.) I was able to pick up a few local campaigns during 2008 as clients, nice since they are big spenders.
Another point I just thought of, since you are just starting I assume your going to be doing it all. From keeping the books, to answering phones, etc.
When you get a warm lead.. don't let it go cold. Perhaps it's just because I also have an automotive sales background, but I never let a potential seo client off the hook until they tell me flat out do not call.
When your first working them, talk to them frequently. Keep them updated with new stats and ways you can work towards improving their rankings. Always remember they are more interested in hearing about real benefits, aka. more phone calls into their store, or on their showroom. Tell them how you can assist them with tracking their ROI, and then follow through. Otherwise they'll drop you like a bad habbit.
If they balk, delay or keep putting you off, or worse even stop answering.. do not assume they are uninterested. It can be any number of things, too preoccupied, personal matters, money issues, etc. Call them atleast once a week, leave messages, learn what thier hot button issue is and overcome it.
Also make business cards. (I like vistaprint they're cheap) then mail a business card or postcard "thank you" to every client when you first speak to them. Stay in their mind, or they will forget you. Offer some free advice from time to time. I can't stress all of this enough to someone starting out. This will make you stand out. I can almost guarantee that no other business they work with will do thoughtful things like this - ESPECIALLY Internet and IT companies.
You will feel like your getting blown off a lot but it's not really the case. I have a client that I just closed down finally two weeks ago. I was pursuing him since January of this year. That's nearly 12 full months. Calling him and other clients is just clockwork.. (Friday Clockwork to be exact) Don't feel like you are pestering them, when you call over time you'll find they will pick your brains about all sorts of Internet related topics.. even choosing new web hosts. (Offer to host their website for them as a package deal)