some things that have worked in schools I know of:
ADVERTIZE.
Find someone who knows how to make brochures. (a student is a good thing, because you can trade lessons for layout designs, so you don't have to pay for anything but printing).
Print a bunch of brochures. In full color. (black and white is cheaper, but it looks cheap, and doesn't attract attention).
Put the brochures in places people will get bored and pick up stuff to read. Doctor's offices, dentists, hair and nail salons, barber shops, DMV if they'll let you. Anywhere people have to sit for a while or wait in line for a long time. Most post offices have areas you can put stuff too.
Get a group of students together and cover the neighborhood with fliers on doors.
On halloween, give your students many many stacks of coupons for free lessons. have them give these to the trick or treaters along with their candy. hehe. let the kids come to you.
GET A GOOD WEBSITE:
Get an easy to remember domain name. Nothing anyone has to think about to spell. If your name is Larry Tskyevitch, You don't want your addy to be
www.tskyevitch-kenpo.com. nobody's gonna remember how to spell it.
Try something like
www.go-karate.com or something else easy.
Find a good site designer. If there's one of your students who knows how, offer them lessons in trade. Lessons are no cash out of your pocket.
Many internet savvy people (like myself) go to the web immediately for information. Most 15-30 year olds go to the internet for movie listings, telephone numbers and all that before they'll go to a newspaper or phone book.
Make your web presence known. Register your site with search engines and martial arts school directories.
Work out a link exchange with other school's websites. Make sure the other schools are more than 50 miles away so you're not competing for students.... say that I'm in Norco. I'm looking for a school in Norco, but find the website for a school in Los Angeles. I'm not going to drive that far for lessons, but if the LA school has a link to the Norco school, then I'm all set. And the LA folks who find the Norco website can find a school local to them as well. This way, schools are helping each other out without competing.