All right, let's get to the point. The first thing you need to work on is links. You need links and lots of them coming from sites that are relevant to the content on yours. For some search engines relevancy does not matter as much as others, but for Google is matters big time.
Now where are these links going to come from? That is the question. They can come from quality web directories, article directories or from other sites that relate to your niche. You gain the relevancy in directories by submitting to the most relevant category to your website. With directories you should be careful of any site that has more than 20 outgoing links listed per page, displays excessive ad-sense or banner ads. Plus some other more advanced items to look for in SEO enhancements, unique on-site content and additional features.
You can also receive back links by writing and publishing relevant articles on article directories. Make sure that you include keywords that you are targeting within the article itself. When writing the article keep it on point and have fun with it to make it something people want to read. You can use examples to make your points and bring more credibility. Most of all include the link back to your website within the author resource box. Without that the whole process is kind of pointless. Once the article is written search for some article directories and start submitting.
Reciprocal linking is not recommended as Google frowns on this activity. Excessive reciprocal linking could result in punishment in the search engines or even banning. If you take part in this activity do so with moderation and extreme care. Three way linking was developed to get around being able to detect the link exchanges, but Google claims to be able to find those kinds of reciprocal linking activities also. Frankly with the minimal reward of reciprocal linking the risk is too great.
Good optimization for search engines will take time. It does not happen overnight so prepare for a consistent hard approach to it. There is a certain amount of enjoyment in achieving goals and modifying strategies as the search engine algorithms change. Keep in mind that if you focus on Google the rankings in the other search engines should also follow.
SEO does not have to be expensive, but it will take an investment of some part from you. Either money or time, if you choose to go low budget be prepared to invest your time.