What is the best way to find new clients?

So far for us the best way to find new clients is by doing a bit of an email partership marketing campaign.

We are finding many web design firms are willing to contract our the SEO part of things for a commission.

That's an excellent idea. The design firms already have a loyal client base. Offering SEO services is another avenue of income for them.

The plus for the SEO, is that in the beginning you can concentrate just on perfecting your field craft. Later on you can start learning contract negotiations, customer service, and about a dozen other matters that come with dealing direct.

most of our work has come from partnerships from web design or web development companies. Cold calling worked in the early days, but now some businesses get called by SEO companies every other day.

As a web development firm we used to outsource the SEO side of the business up to about two years ago.
We then decided to bring it all in house, one for profitability and the other we can build along side the SEO team. As a result custoemr service has improved and reaction time to client's problems or site problems and work is 100% faster and more efficient.
We had a company do a market survey targeting several sectors who used web development and SEO services and 90% of them agreed it would be far easier and efficient under one roof. These days all is done in-house, except we need contractors or other stuff like more intense link building which we outsource.
But all in all it if you don't have the SEO capabilities then it's a great idea to source it.

One problem I have run into is that not all Design Firms are up to speed on marketing SEO to their clients.

Make sure they have all the sales tools to push SEO. Even if you have to spend a day or two drawing their sales team a picture of SEO 101, it is worth it.

Customer Service on SEO is also a factor. Training your resellers on how to handle common problems may also be neccessary. "What do I say when a client asks me why am I not top 10 yet?"

Customer Service on SEO is also a factor. Training your resellers on how to handle common problems may also be necessary. "What do I say when a client asks me why am I not top 10 yet?"

A lot of this works evolves around educating the customer. It's an idea to keep in mind that this kind of work is exactly as it states 'New Media' it is still a media that is new in a lot of respects and the average person though they use the internet a lot still has no real idea of the machinations and how it works. We hear it a lot, customers who have ended up with marketing companies who are now trying there hands at 'SEO work' they come and wonder why there sites are not doing well, wondering why the marketing company has no knowledge of development and the working and have not educated the customer. I thoroughly believe it's a learning curve for the customer and for the dev/seo company continuously.