To start, you'll need to install an Ethereum client, for example Geth (Golang Ethereum client). You'll find the instructions to install Geth for your operating system on the Ethereum repository on GitHub (https://github.com/ethereum/go-ethereum/wiki/Installing-Geth). For Ubuntu, you can install the Geth client using the following command:

sudo add-apt-repository -y ppa:ethereum/ethereum
sudo apt-get update
sudo apt-get install ethereum

For this local network, we will be running two nodes (on the same machine), therefore we need to create two different folders to host their blockchain copies and wallets. Create a directory called Mytestnet with the following two subdirectories:

~/Mytestnet
 |-- nodeA
 |-- nodeB