This is a fairly broad question. Social networking is a pretty packed market, you will need a bigger marketing budget for sure. Do you have a niche you are wanting to market to? Really, website companies like this is not just a step by step process, you need to come up with the vision of it and if necessary, find a developer who might be interested in working with you within your budget.
To be honest this market and niche is now very satuarated and to be a big success i think you should have got in about 12/18 months ago, you could still make a sucessful site, but you need a bigger marketing budget for sure. the best software / script out of all the free and paid ones in my opinion is handshakes, but it is quite expensive. you can still buy it within your budget though!