If you have followed this Majesty 2 strategy guide up to this point, you may only have basic tower defense structures. Unfortunately, this will not be enough to protect your town as time goes on. You will need the dwarf catapult and mage towers. When you have enough gold, build a wizard guild, and then upgrade your castle. To get the dwarves you will also need to upgrade your blacksmith. When this is done, build a dwarf guild, then the catapult towers. You may also want to hire the dwarves and research their Stone Incantation spell that can build or restore part of a building.
You will also need to upgrade your heroes and weapons. If you have clerics, be sure to research the Sacred Heal spell.