Find several moderately successful bands. The first step to starting an indie record label is to find some local bands that have a following and would be interested in having you put out a record of theirs. You should make sure that if they already have any other record contracts, that there are no legal issues with having them release an album under your label. Once you contact a few bands, talk to them about releasing a compilation as their first release on your label. The benefit of having several local bands with a local following release a compilation is that you will unite several fan bases and have all of them focusing on your label. This way, the next time you release a record, all of those fans will have heard of your label and you can expect some return customers.
Talk to local record stores and find a distributor. If there are any local record stores within your area, you should inform them that you are starting a label and would like to have your records sold in their stores. Many record stores are more than happy to help out local bands and local labels because it drives business to them if your label does well. To get your records in stores outside of your area talk to some other labels about the distribution companies they work with and also look into digital distribution. Through sites like CD Baby, iTunes, and Amazon, you can reach a large amount of potential fans.
Promote your bands and your label. By contacting local college radio stations and alternative newspaper outlets, you will find that there are a lot of opportunities to promote your band. Many college stations have local music hours or shows and many alternative newspapers have write-ups on local music fairly often. You can also put an ad in the paper to promote your label and your new releases. Reaching out to as many potential promotional resources will attract more attention to your label and your bands, insuring success for the both of you.
Make sure your bands tour. One of the most important tools for a label and it's bands is touring. By having your bands tour, they are getting direct exposure to new crowds in new cities and thus, also promoting your record label in the process. They will also be playing with new bands that might want to release on your label. The most important goal is getting your label name out there. If people don't know you exist, they won't be able to buy your records.