Write a business plan. This is absolutely crucial. You need to work out how you can make money from your rap music studio. There are many different ways a rap studio can make money. There is no right or wrong answer in terms of who you should produce or how you should market tracks. Investigate all the options and come up with a clear strategy that will convince artists and investors of your label's potential.
Think of a name for your rap music studio. Chances are, the first few names you think of will already be taken, so have plenty of back-up options. Make sure the name is professional, catchy and captures the vision you have for your label. Check with the American Society of Composers, Authors and Publishers (ASCAP), and also with local government databases to make sure nobody has registered your desired trading name. If no one has taken the name, purchase it quickly before somebody else does.
Join a reputable performance rights organization. In addition to ASCAP, the Society of European Stage Authors and Composers (SESAC) and Broadcast Music, Inc. (BMI) are the two other big performance rights organizations in the U.S. You can be an active member of only one of these organizations at any given time. See the Resources section.
Obtain a business license from local or state government. You need to register your rap music studio either as Sole Proprietor, General Partnership, Corporation, or DBA (doing business as). Investigate which of these licenses is most suitable for your needs. If you have the money, discuss your options with a corporate lawyer.
Open a business bank account and arrange meetings with potential investors to raise capital. Do not be too daunted if many of them say no. Adjust your business plan accordingly. If you are having difficulty raising the necessary capital, then cut out production costs in your business plan. You could, for example, release all your music studio's songs online, initially, rather than pay to have CDs pressed. Find ways to make your rap music studio work within budget.
Buy music equipment. You will definitely need some recording equipment. Depending on how much capital you have invested in your rap music studio, you might rent a location and deck it out with the very latest recording and editing equipment. Or you may just buy a high-end music production package for your computer and run the production company from your bedroom. Some of the top producers in music today started off mixing tracks in their homes.
Find artists you think could make your rap music studio money. Much of your research can be done online. Websites like MySpace are popular with up-and-coming rap artists. Have a look and see if any good rappers live in your area. Put out adverts on social networking sites and in the local press advertising your rap music studio. Hold a freestyle night at a local venue, where rap artists can come and battle it out on stage. Offer the winner a recording contract. There are many ways to attract talented artists, you just have to use your imagination. Once you have found some performers you like, get them in to your studio and record some material.
Release some rap tracks. This is what it is all about: your rap music studio releasing original tunes. How you do this and on what scale will again depend on your budget. You might get a limited press of CDs done and sell them through local record stores or online. Sending demos to specialist rap radio stations will help generate interest in your artists and tracks. But the best and most cost-effective way to release tracks is online, through sites such as iTunes. This way you save on many production costs.