Go out to clubs to search for talent. Smaller labels only have a few employees, so it is important to keep up-to -date with what is popular. By visiting clubs to see live acts and artists, you can see who has the best following locally. If a band has a large crowd in a major city, you can sign them to a production deal to help them get the attention that they need to excel.
Delegate some responsibilities to your A&R reps. These key players help you find talent on the Internet as well as through social networking websites like Facebook and Myspace. They can scour the Internet for talent and solicit them to sign with you to help them with the production aspects that they are lacking. Music production labels help develop artists on the production side to help them sound better and entice larger labels to license the material you have been working on.
Meet with local producers and listen to samples of work they have done. You want to have the best producers in the area working with your artists on various projects. You can pay them as independent contractors, or pick the best to work solely for your label. As there are genre-specific producers, you may want one good producer per genre. If you only deal with one specific genre, you may just want to hire one or two gifted producers for your staff.
Setup distribution channels for your records. Once you have recorded an artist, you want to get their music out to the public. Record labels sometimes partner with other labels for distribution purposes so that they can get the most exposure for their artists in record stores nationwide.
Setup a radio department for your artists. The radio department will lobby and speak to programming directors at radio stations to get your artists some airtime. Not only can they get the song played at a good time during the day, but the radio department can also set up on-air interviews for the artists as well as radio-sponsored shows for artists while on tour.