The party starts with 200 gold and one throw-away weapon each. Getting to the first exploit requires one character to have the secondary skill of Navigation, which is learned in the town of Tundara at a cost of 750 gold. So at the very least, you have to "play it straight" by grinding for that gold, so you may as well invest in some basic equipment. Unlike many other CRPGs, player-rolled characters get one worthless weapon and NO additional starting gold, so spinning up throw-aways won't help.
Gear will drop like candy from encounters throughout the game, and restoring from saved game due to unlucky random encounters will be a regular thing regardless of how well you gear, so it's just not worthwhile to agonize and blow your whole purse on early gear decisions. Playing to MM2's own design means treating each encounter as a mystery box that you're going to do-over until you a) survive and b) get something you really want. If you play this mindset well early on, then the mid-game will be an easy cruise for gold and XP, and gear drops will just be icing on the cake.
So with this in mind, go to the armory, get hand axes and leather armor for your front-rank fighters (Knight and Paladin in the pre-rolled party) and Slings +1 for your Archer and Robber. The Robber and Cleric in the pre-rolled party get very nice hand weapons to start with anyway. Shuffle weapons to your other characters as desired. Armor and weapon upgrades will be farmed from encounters.
Incidentally, I don't think it's even hinted anywhere in the game itself, nor in the online strat guides, but I'm almost positive that different classes have different levels of skill with different weapons. Barbarians do best with axes, ideally a grand axe since they don't use shields; archers excel with pole arms, ideally a Titan's Pike. I think swords are best for Knights and Paladins, but in the early game we just want them to crack out decent damage on the cheap.
You can farm a good bit without even leaving the Inn. Along the back wall is a secret door into a 1x3 area with a random encounter trigger. Each time you sign in (save) at the Inn desk, it resets the town's random encounter triggers. Hit that random encounter until you get some goblins or human-types (e.g. merchants) with good loot. Block until everyone dies and reload your saved game, if you draw monsters that steal from you.
Wandering around town, you may stumble across the trainer, and you will probably accumulate enough XP to make leveling up a temptation. But training at any town besides Atlantium is sub-optimal, so just hold off on leveling for right now.
Once you have 750 gold, go to Tundara (8,13) and buy the Navigator secondary skill for one of your characters. (I hooked up my Sorceror.) Then leave Tundara, heading back east to the next outdoor map section. Here your goal is to reach B1(9,9) without getting teleported by a blizzard. You can dodge blizzards by following the path of (8,3) > (8,8) > (7,8) > (7,10) > (9,10) > (9,9). At (9,9) the pegasus asks you its name; there is a quest to learn this, which requires the Linguist skill and ain't nobody got time (or money) fo dat, so its name is note 1 at the end of the entry. Backtrack very carefully, and by carefully I mean literally backing along your path into the tundra rather than facing forward, to the road at (8,3). Why? Because the game designer, Jon Van Canaghem, apparently thought it would be funny to just summarily kill the whole party if you enter certain squares facing the wrong direction.
So when you return to Tundara, flush with cash, the first thing you will want to do is get the Merchant skill. (I hooked up my slot 1 character, the Knight.) From here you can take town teleportals to Atlantium, train with full advantage, sell off unneeded gear and equip in style. With the Merchant skill, you'll sell obsolete gear back at cost - so you may as well splurge.
With your party decked out in peak gear, you're ready to return to Middlegate to start questing in earnest.
Note 1: The name is Meenu