If you're going with setting circles on a dob, there's a couple of ways. One is by setting your ground board to True North. This becomes your permanent "Zero". This also requires your altitude bearing to be trued to either dead verticle or dead horizontal. You'll also need to have some means of leveling your scope.
This link shows how to employ manual setting circles. It als shows a very clever, simple and inexpensive way of leveling your dob.
Another way is with an electronic gizmo that has accelerometers in it to then spit out the alt/az co-ordinates. It also requires the scope to be aligned to true north.
Aligning on a star can be done to achieve your initial azimuth bearing too - I realised this after reading Allan's post!
I believe that there may be one or two smart phone apps that allow the phone to act as an alt/az digital setting circle. Others may be able to eleborate on this. The electronic gizmo I mentioned,
Astrofix, works with the same type of accelerometers found in smart phones.
Mental.