A lot of people own recording studios these days. Mostly, they are home studios in a spare bedroom or basement. But some people even take it a step further. I have friends who rent out commercial space to build recording studios. And a few people build full-blown, professional studios with million dollar budgets. But face it - most people don't have that kind of money to start a studio. Here's a good way to start a small, but profitable, recording studio even in your basement.
I could spend all day telling you about acoustics and room dimensions, but let's keep it simple. You need enough space to fit all your gear, plus the band or artist you are recording. That might include drums, guitar amps, keyboards, and more. Or maybe you will use a smaller space and just record one instrument at a time. Big or small, you can make it work. Just be aware of how much space you have to work with. Then try to cut down on reflections, or echoes in the room. Hard surfaces, like drywall or concrete, will reflect sound all over the place. To control it, you need to break up that surface so the sound bounces randomly - not back and forth between two walls. This can be done with a little acoustic foam, or even blankets if you have a low budget. Just cover some wall space, and then test it out. Use the "clap" technique. Walk around the room clapping your hands every few seconds. Listen to the way the sound echoes. As you move foam around, or add more foam, that sound will change. Just keep working at it until it sounds good to you.
Now you need to get sound onto tape, or a computer these days. You probably won't be using any analog recording equipment, or recording to cassette tapes. That's good. You save space by using digital equipment. I recommend at least a 2 channel USB interface, plugged into a newer computer. Computers are built so fast these days, it really doesn't matter if you spend $350 or $3000 on a computer. Just get one that works, doesn't have a bunch of viruses, and fits your budget. A 2 channel interface, like the Digidesign Mbox 2, will give you room to record 2 microphones at once. That way you can track drums in stereo, then overlay guitars, bass, vocals, and whatever else. That's a basic recording, but it works. If you can afford it, go ahead and get a USB interface that has more channels. I like my TASCAM US1641. It has 8 mic preamps, with even more inputs on the back. Plenty of flexibility! Oh, and don't worry about software. You will get some kind of software with your interface. That should be enough to get you started.
A couple microphones, a set of headphones, and some cables will round out your studio. Get at least two microphones for your studio, and make sure they are in your budget. Get a condenser microphone for vocals or acoustic guitars, and a dynamic microphone for drums and electric instruments. You will add more to your collection later on, but that's enough to start. Get decent headphones right away. $50 will get you headphones that sound much better than the ones that came with your iPod! The grab a few microphone cables, and you're basically done.
Sure, you will want to add more equipment later on. But this is enough to get you recording at first. Go find some bands to work with, and you're on your way to running a profitable studio!