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Describe the process in steps, please. What tools do you use for it?

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    Not a clear question. Exactly like "how do you build a car"? The answer is too big to fit in our site's style. See here what kind of questions are expected on DBA_SE. – Marian Feb 19 '11 at 11:00
  • If you don't know much about it, I can strongly recommend to read the book "Beginning Database Design" by Clare Churcher. – j.p. Feb 19 '11 at 16:30
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Start with "database design" on Wikipedia.

I'd also recommend using Object Role Modelling to capture your conceptual model

Otherwise, your question is far too broad.

What you don't do is start knocking out some CREATE TABLE statements, or design as go along writing client side code

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