Distribution you can do on CD Baby yes...it may not be as wide, but you can also talk to stores in the area and negotiate with them. If there is a pull for you there, you can get into the stores. They wont stock your product if it wont sell.
Another thing you can do is talk to labels for distrbution only. It's a lot easier than getting signed. You ask them to distribute, you get in the stores, they get their cut, you get yours, we're all happy. You can even go through indie labels if you so desire.
Contacts and experience is where you should of started at. The world works like this. It's not what you know, its WHO you know. Why are there bad bands out there? They know people, or just...luck. But in most cases, its who you know.
Marketing from a label really is pointless to be honest with you. They put ads on billboards, magazines, newspapers, blah blah. It feels cool because its all over the place and you think you're going to make it big...but do you really? How many CDs do you really buy based on an ad in a magazine? Maybe if you're The Beatles or Elvis or something...but I never buy based on an ad, I buy based on what I can hear.
You can start promoting by sending in demos to e-zines (which are preferred because they'll link to your music or have music in the article) for review or other music review sites that are targeted for your genre. Niche marketing is where it's at, not mass marketing. You end up wasting money by mass marketing.
There are various online community sites that you can advertise on like crazy. Myspace is PERFECT because there are tons of people on there that are there for their friends, bands, and because they're bored. Give them something to do, personalize things, be their friend, etc. The Grassroots method is a really good one.
There are tons of people on myspace that can help your band get gigs in other states. Talk to other bands, they're potential connections. Help them out, they'll help you. Ask them how they do it, ask them for information on various venues. Talk to your FANS. They're the ones that want to see you, if they want it enough and you're good enough, they'll ask around and research for you and give you the people to talk to so you can book the gigs.
You HAVE to play gigs out of your area. There is no way that you can succeed unless you play outside of your small conqured area. Keep in mind that tours do cost money, but most of the money is lost by spending money you shouldn't and terrible planning. I can give you advice for this if you want more info.
Also, remember that you have to spend money in order to make money. Do you have merch? If not, get some, lots...considering you have tons of fans...right? They'll buy it, you'll make a profit, and you'll fund further endeavors. Remember this though, most people don't want to pay more than 10 dollars for a CD...aim lower if you can. Don't try to make money off of the music, make money off of the other products. People don't want to pay for music nowadays. Music is a SERVICE, not a product. The shows bring in the money, the other items bring in the money. The CD doesnt.
YOU CAN DO IT YOURSELF! Empower yourself because the labels will only hold you back.