Determine what you will be most regularly recording so that you can think about equipment purchase and setup. If you plan on recording only yourself playing acoustic guitar and singing, you will need fewer inputs on a console or digital audio interface than if you were going to record a jazz quartet. If you plan on operating a commercial facility, you will need a more extensive setup.
Estimate how much money you are able to spend. Now that you know your true needs, begin to think about purchasing the equipment you need most if you cannot buy everything all at once.
Find a practical space for your recording studio. Recording music can often be loud and bother neighbors if you are in a residential area. You might even pick up unwanted outside noise when recording. Spaces in light industrial areas can make great recording studios, though many landlords will only allow recording at night when other businesses are not operating.
Measure and plan your space. Make a diagram locating recording equipment like your recording console, outboard gear and computers, as well as where the musicians will be during tracking. Good space planning is essential when building a recording studio, particularly if you are working in a small area.
Treat your walls with acoustic foam such as described at auralex.com. Acoustic foam helps dampen unwanted sound. Treating the area you plan on mixing is especially important.
Create an isolation area for vocals or loud guitar amps. Large closets or hallways can be used. Treat the walls with specially made isolation foam that will help reduce standing waves and keep unwanted noise from entering or leaving the isolation area. If you have enough space, create several isolation areas so that more instruments or vocals can be recorded at once.