Bandcoach dropping gems as per usual!
I am in the process of starting a record label and I already have 2 producers (plus myself) coming on board. I'm looking to establish ourselves as a production company first before branching out further. Plus, I really like instrumental music.
In regards to building relationships, the easiest way you'll sign artists is waiting for them to come to you. If you're an artist yourself, release some music. If you find someone you like, just follow them on Twitter and give them a tweet every now and then. When they find you own a label, that may spark their interest in signing. If you attend gigs in your local area & like someones performance, tell them how impressed you are. Seriously, everyone loves getting their ass licked when they are starting out (as long as it's tastefully done, of course).
For example, there's a band who tour the UK, and I attended one of their gigs. Was really impressed with them about a year ago, so when they had a break I went up and had a chat. Added one of the members on Facebook, and they tell me all their news every time I see them. I.e. How they just rejected a deal from a major, which recently led to me offering them a deal when I was inebriated on New Years Eve. I admit, very unprofessional, so next time I see him, I'll apologise. But this is how things happen.
Just get involved. You obviously consider yourself more of a curator than a business man which is great. If you're going to be a curator you need to be involved in the scene. And I don't mean globally, just make some moves locally. Do you have a couple of friends who want to get serious with their music? Take them under your wing and release something on a one album basis.
Remember, you don't have to offer long term deals either. The industry is filled with shady people. Q Tip famously stated rule # 4080, so make sure you build up that trust. Offer them a short term deal. "Oh, I loved your demo. Are you planning on releasing it? Why not release it with me as a tester? Let's see how things go." Then you've always got the option of extending that business relationship afterwards.
That's how I'm approaching everything. It's allowed me to see the strengths and weaknesses of these producers before committing a lot of resources towards them.
My record label is frofresh.com by the way. Yet to release any music, sorting out the distribution side at the moment. For the time being, I have a little side project/experiment I'm working on. It's a Hip Hop aggregation blog which you can also find at internalaffairs.co.
P.S. If you're looking to sign the bigger artists in your first 5-10 years, you're being unrealistic. Unless you can improve their career which you probably can't if you're just starting out, then they won't be interested. The indie labels job is traditionally find the new talent who aren't getting picked up by the majors.
P.P.S. Read up on your favourite indie labels. See what works and what doesn't work for them, learn from them. Best advice anyone can give you in your journey of starting a label.