A relational database is designed to store structured data that models real-life entities, with relationships between tables pre-defined at the time of creation. To design an efficient database, one must first understand the business needs and identify the entities, properties, and relationships between them. The schema, which defines the structure of the data, has a significant impact on performance and should be designed carefully to avoid future headaches. Key steps include defining primary keys, foreign keys, and indexing to ensure quick look-ups, and using tools like ERDs (entity-relationship diagrams) to visualize the entities and their relationships. With proper planning and design, relational databases can provide a robust and scalable solution for storing and managing data.