The first Colony is the most important, so choose the best site you can for it. It will need a good supply of Ore, Lumber and Food. So it must have a Hill or Mountain in its radius, and one or two Conifer or Mixed Forests, Prime Timber would also be good. A small River will increase production, a Large one more so. Also remember the square where a river empties into the sea will produce more fish. Cash crops, Wheat and Fish are good too. It MUST also be near the High Seas and a Port, to import Colonists, Tools and Weapons, and export Cash Crops and finished Goods, fast and safely. As the 'mother' Colony will Educate most of the Immigrants and have most of the Factories it will require a lot of food, so when it is fully grown will only be able to have 2 lumber squares, so make sure they are good producers. Excess Ore will be needed, to make Tools, to seed new Colonies and outfit Pioneers. Try not to have any Indian squares in the radius, as your proximity will upset them, and it will cost your to buy their land when you are weak - either in money or as attacks. NEVER have an Indian Village in the radius, you will lose that square. Also, remember the Aztecs and Inca Cities have a Radius of 2 square.
If you build your Colony near the equator it will mean later when you become
powerful that your ships can reach anywhere on the map quicker. Very useful
which such slow movement rates and when attacking and plundering Colonies. But timber and food production will be low.
A Colony near the pole will have good timber and food production. Mixed forest found here provides the most timber and when plowed the most food. However the principle commodity will be furs which require a lot of shipping
and fetch a low price. Also it will take a incredibly long time to get to
the other pole, which will make military campaigns much more difficult.
Scout around First
Use a Scout to explore new territory, have him visit every Indian Village to get gifts, a map of the surrounding area or to be upgraded to expert. Beware they may kill him for his Horses. Make particularly sure you go to Aztec and
Inca cities as they give very large gifts of money. All movement points are used when going into a Village, so try to go in at 1 MP (a Scout has 4 MPs), this means he will cover territory quicker. Mountains use 3 MPs, Hills and Forest 2 MPs and open land 1 MP, so keep to open land as much as possible. Ships can map out the coastline. When an area has been fully explored either wait for a Ship to take him home or use the GOTO command to send him to the nearest Colony. This will pinpoint the best sites and other European Colonies.
Building close to other Cities
It is not a good idea to build too near Aztec or Inca Cities as they use so many squares (two out from each city instead of one for less advanced tribes). However don't be too far away as important skills like farming, fishing and silver mining can be learned from them, which are very useful early in the game. If you build close to other Europeans, you must be prepared to go to War, and fast. Do a surgical strike, and take them out as soon as you have a big enough force, buy weapons if necessary. Otherwise your Colonies may be blockaded and fall. The advantage of building near other Europeans is that when you capture them all your Colonies will be close together. New skills may be gained for captured Colonists, and plunder removed quickly. Also your possessions will be easier to defend, and require less shipping.
If you build near the Spanish this will make it easier to arm local Indians
who will weaken them as the Spanish always attack Indians. But some Indian villages will be destroyed, it is impossible to prevent this. So it is a good
place to expand as you don't have to buy Indian lands or get attacked all
the time by restless natives when your population starts increasing. You might also to be able to capture Spanish plunder stolen from the Indians, as you can't give it back it is better to deprive your of enemy it.
When a Colony comes under siege Food may be in short supply, if you have a few sea Squares these will not be blockaded. A Fish produces a lot of Food, a normal square less. It's a good idea to have the first Colony next to a fish. Each coast square next to a sea square increases fish production, as do rivers emptying into that square. Use Expert Fishermen for maximum production, Indians are next best. Remember you will need a Dock, so you may want to build this first.
Have Outposts for Special Resource Squares
This will allow squares in bigger Colonies to be used for sometime else, and provide somewhere to put excess Colonists when your other Colonies get overloaded. Try and harvest one of each resource, any more and commodity prices will nose-dive. You will need a good road network and Wagon Trains. In times of War these Outposts will be vulnerable to attack, as will their Wagon Trains, so Garrison them adequately, and suspend trade, commodity prices may climb during the blockade. You will also get more Indian Gifts, as they don't have to travel so far. Make sure your trade routes are set up to collect these gifts. Silver will become depleted, so when it is used up disband the outpost. If the price is still good, move the Silver Miner somewhere else and set-up a new outpost. Have a road in the Silver square for maximum production, or you will waste it. Choose a name like Silver Camp to mark it as a temporary Colony. Indians are more friendly to smaller Colonies.
Plow the Colony Square
This will provide food for another Colonist, very useful at the beginning and provide more cash Crops. Fur prices are always lowest. You will also get some free Lumber to begin production of a Lumbermill or Dock. The Computer never plows the Colony Square, so remember to plow it when you capture Colonies. This also means your Privateers Capture a lot of Furs, so you may not require your own Fur Trapper, otherwise prices will be depressed.
Build Colonies Close Together
This will allow reinforcements and wagon trains to make the trip in one turn. Wagon train capacity will be increased, and will be less easy to ambush. Have each Colonies wagon train travelling to its neighbour, but make sure it carries everything. Have one Colony process a commodity, and route raw materials there. If one Colony is producing excess Lumber or Ore, move it to one with shortages.
Have a Port on each Coast
This means invasion forces won't have to travel as far, and Privateers can unload quicker. Also where the land narrows to one square your can have a Port with access to both Oceans. Remember when Ships go through they stop for one turn, and Ships are not allowed on inland lakes. This will also stop enemy land Units going from one half of a Continent to the other.
Seed Colonies with Tools and Horses
Either buy them from Europe or ship excesses in from other Colonies. The Tools will allow Pioneers to be refitted, or a Printing Press, Newspaper or Blacksmiths Shop to be built, which are very useful at the beginning.