Mark out the area in which you will install the retaining wall with marking paint. Mark both the front and back of the wall; the area that you mark should be about 1 inch wider than the stones you will install.
Dig out the entire area of the retaining wall to a depth of 6 inches. Run a steel rake over the area to flatten it out and remove any larger stones or sticks.
Compact the entire trench with a hand tamper or plate compactor to completely flatten the area. This ensures that your wall will have a flat, firm surface on which to sit.
Line the trench that you dug out with landscape fabric. This facilitates water drainage to prevent water from seeping into the wall. It will also prevent weeds from growing into the wall and adding pressure from the inside.
Fill the trench with 2 inches of paving stone base or crushed gravel. Use the steel rake to smooth it over.
Dampen the gravel and the compact it to flatten it out. Wetting it first limits the amount of dust kicked up from compacting.
Add another 2 inch layer of gravel, dampen and compact. Continue to add layers of gravel and compact them until you have enough room left in the trench that the bottom half of the first row of bricks or stones from the wall will be buried. This ensures a more stable base on which to place the wall.