Recording a demo for your band is the best way to get your music out to the public and start playing some serious shows. There are 3 main ways to make a demo that I explain below.
Recording On Your Own
You can record on your own and many artists choose to. First, you will need to learn how to make a studio. You'll need basic equipment like microphones, an audio interface, and good software on your computer.
You'll also need an "ear" for recording if you're in charge of your band's sound. This is the hardest part of recording on your own.
I highly recommend you do this if you are an individual artist that can play multiple instruments. You'll save some money and learn a lot in the process.
If you are in a band I would only suggest doing this if someone can afford all the equipment and wants to record it. If no one wants to put up the cash then you'll have to pay someone to record you, which is another great option.
Having A Friend Record It
Lots of times you'll have a friend or distant relative that does amateur recording just for fun. Talk to them about your band and music and see if they will record it for free.
The benefits here are that most of the time it's free. The downfall and negatives are that it's not guaranteed quality and may not sound that good. Listen to their previous material to see if you like their audio engineering ability or not.
Paying For Professional Recording
The most expensive but best sounding option. You can pay for recording time at a local studio where you will receive quality sound for your band's demo.
Before you go into the studio I recommend you call in to all the recording studios around town and listen to the music they've recorded with your band. You may hear a style that you really love so you should go with that audio engineer.
Another important note is the cost of studio time. There is a slight chance that you are able to get a discount rate. If they charge per song, ask for your 5th song free. If they charge per hour in the recording studio, try to knock a few dollars off the rate. Since you are paying to get recorded you need to become thrifty.
Once You've Got Your Demo
Now that you've got your demo on hand you should do 2 things immediately. The first one is to upload and songs you want to share on the internet. This is a quick way of getting fans online that hopefully will come to your shows.
The second thing is to start sending press kits to local venues that you want to play. A press kit is basically your music and information about the band that you can send to different venues to try to get in contact with whoever does the booking.
Now that you have a demo you are ahead of 90% of the other bands in your area. Keep in mind that you want to team up with bands, not overly compete with them. Try to combine your press kits into a combo kit that you can send to a venue where they will be more likely to hire two bands to play at a time. Best of luck!