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This tutorial shows an easy way to work on a Wordpress site without taking it live. There is a setting that makes the search engines ignore the site until you are ready. Be careful to turn this back on when you're ready to launch. I've seen some big sites for big companies launch with this enabled ... everyone was sitting around wondering why they had no traffic.

Login to Your Wordpress Site

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Go to Settings >> Privacy

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Finally set Blog Visibility to "I would like to block search engines, but allow normal visitors" and your site will be hidden from Google, Bing and Yahoo.