Fulcrum,
I don't get to instruct much any more, but when I get the chance, I revel in it. You'll enjoy teaching. How could anyone not enjoy sharing flight?
Greg Brown put out a book called The Savvy Flight Instructor. I don't know if they still do, but NAFI would send that book to new members as part of the membership. That's probably the best book you will find on the subject. It covers getting and retaining students, and a plethora of other information. (How many hats would you say there are, in a plethora...sorry).
Liability insurance is great, but nearly impossible to get and it's a lot like a really small parachute; it will only break the fall. It won't stop the fall. You're going to incur liability by providing instruction, and that liability doesn't go away for a long time. You teach a student and three years later that student hurts somebody, all he or she need say is that Fulcrum-my-instructor taught me to do it this way. Fight's on.
All you can do to truly defend yourself is to provide the best service you can possibly give. Train to proficiency. Recognize that you're NOT building hours, but providing one of the most valueable and noble services known to mankind; you're teaching. Treat your endevour with the respect it deserves; take it seriously. This is the best defense against lawsuits. You can't prevent them, but you can avoid them.
As for finding work, it's out there. Business cards help. Get involved in every way you can. Recognize now that free time is a thing of the past. Give up your weekends, your evenings, your mornings, and your lunch hours. Whenever you have five minutes, pursue your vocation like a holy quest. Most instructors sit at the office and wait for business; it doesn't have to be that way. Go get it.
Get involved with Civil Air Patrol. You can't charge for instruction in the airplane, but you can make contacts, get instructing experience, and it will bring you business. Count on it. Same for EAA, and other groups at the airport. Make yourself known. Get in and help out.
Teach boy scout aviation merit badges, and offer to take every scout who passes for an intro flight. This will make you known. I've done this for many years, and I believe in it.
When I was doing a lot more instructing, I found endless ways to get attention for flying, and flight instructing. I towed banners advertising the fact, I took an airplane apart once and put it together in a mall to sell aviation and instructing. I taught classes, ground schools, public awareness classes, etc. I towed an airplane through a parade. Lots of late nights with students, early mornings, and everything in between.
Follow up with your students. How many people start flight training, but never finish? A lot. How many get a pilot certificate, and then drop out? There are many inactive pilots you can go get and bring back to activity. If you don't hear from someone after a week, call them. Send cards. Visit. Show them you're interested, and motivate them. Motivation in flying is contageous, and you must be the disease carrier. Take it to your public, to your students, and infect them, then keep it active and burning inside them. It's entirely up to you.
Good luck!!