Step 1: State the formula for the number of diagonals.
The number of diagonals in a polygon with $n$ sides is given by the formula:
\[N_d = \frac{n(n-3)}{2}\]
Alternatively, it can be thought of as selecting 2 vertices out of $n$ vertices ($^nC_2$) and subtracting the $n$ sides of the polygon, so $N_d = {^nC_2} - n = \frac{n(n-1)}{2} - n$.
Step 2: Set up the equation using the given number of diagonals.
We are given that the number of diagonals is 54.
Using the formula $N_d = \frac{n(n-3)}{2}$, we set up the equation:
\[\frac{n(n-3)}{2} = 54\]
Step 3: Solve the quadratic equation for $n$.
Multiply both sides by 2:
\[n(n-3) = 108\]
Expand the left side:
\[n^2 - 3n = 108\]
Rearrange into a standard quadratic equation form:
\[n^2 - 3n - 108 = 0\]
Factor the quadratic equation. We need two numbers that multiply to -108 and add to -3. These numbers are -12 and 9.
\[(n - 12)(n + 9) = 0\]
This gives two possible values for $n$:
\[n - 12 = 0 \Rightarrow n = 12\]
\[n + 9 = 0 \Rightarrow n = -9\]
Step 4: Choose the valid value for $n$.
The number of sides of a polygon cannot be negative.
Therefore, the valid number of sides is $n = 12$.