You have escaped from Midgar and found yourself on the World Map of Final Fantasy VII for the first time. At this point in the game there is nothing that can be done on the World Map aside from heading directly to the town of Kalm.
That being said, you may encounter an enemy called a Sweeper Custom (shown in the screenshot below). Sweeper Customs can use a move called Mantra Magic on your party which is a move that can be learned using the 
Enemy Skill Materia. Mantra Magic is actually a fairly powerful move for you to have in your arsenal at this point in the game and you can use it to clear groups of enemies with lower HP.
In addition to that, you can also steal an 
Atomic Scissors gun from them, which is a great upgrade for Barret. It is a melee-based weapon rather than a long-range weapon though so it does have its drawbacks.
Kalm is just on the outskirts of Midgar. You will be able to see it if you rotate your camera enough (using the 
, 
, 
, 
Buttons).
Use the map below as well as the mini-map on your screen to help you find the way. Press the 
Button to bring up the map. Travel to Kalm once you are ready to proceed.
The story and conversations will continue as soon as you step forward in to the town. Before you enter the Inn though to meet up with the rest of your team there are three shops that you should check out in the northwest section of town.
These shops include the Item Store and the combination Materia/Weapon Stores. You can purchase 
Earth Materia and Heal Materia in the Materia store but both are lackluster purchases and are a waste of your gil. There are a ton of new weapons available in the store including:
Mythril Saber
Cannon Ball
Mythril Claw
Full Metal Staff
You can also purchase 
Mythril Armlets from the Weapon Store but you likely already have armor that is stronger than these.
There are a few scattered items throughout town which you should pickup as well. Enter the first house on the left shown in the screenshot below.
There is an 
Ether in the door underneath the staircase.
Enter the next house over (the middle house shown in the screenshot below). The cabinet next to the two beds on the second floor of the house contains another Ether.
Enter the third house furthest on the right. The closet next to the little girl on the second floor has a Guard Source inside of it.
There is also a spiral staircase at the back of this house. The staircase leads to a room that contains a treasure chest with a 
Peacemaker inside. The Peacemaker is a long range weapon for a character that you do not have in your party yet named Vincent.
The entrance to the last house is located on the east side of town. Go inside and check the door underneath the staircase to find another Ether.
With all these Ethers that you have picked up you will certainly not be running out of MP any time soon. Keep in mind as well that Ethers can be sold for quite a bit of cash (750 gil). Sell them if you need to as you will find more throughout your travels.
Enter the Inn once you are done to continue the story. The door to the Inn is back near the entrance to Kalm and your team is up on the second floor.
During the flashback scenes you will be thrown into a battle against a Dragon with Sephiroth. You cannot die or lose this battle so don’t worry about any of the actions you have Cloud perform.
Once Cloud, Sephiroth and the other Shinra Soldiers arrive in Nibelheim you can wander over to Tifa’s house and to Cloud’s house.
Cloud has the option of playing on Tifa’s piano while in your house. Make sure that you choose the option to “jam on it” when you are in there as this is required to obtain an 
Elemental Materia later on in the game.
Don't forget to have Cloud ‘jam’ on Tifa’s piano during the flashback sequence. There’s no way to return to this flashback sequence which means you’ll permanently miss out on obtaining this Materia.
There is also a flashback scene once you enter Cloud’s house involving his mother. Once you are done exploring the town, proceed to the Nibelheim Inn where Sephiroth can be found on the second floor.
You can find him on the second floor. Engage in a conversation with him twice to progress the story and choose the option to “get some sleep”.
The story resumes in the morning with Tifa acting as the guide for the Shinra Soldiers helping to get them up to the Mount Nibelheim Reactor. It is time to begin the ascent up the mountain!
Thankfully the majority of this trek is taken care of automatically and you don’t have to walk up the entire mountain this time. Unfortunately, you’re going to be back here though very shortly and getting to the reactor is going to take quite a bit longer next time.
Follow the trail along once you are given control of Cloud and the rest of the party. The rest of the flashback involves talking to Sephiroth and completing actions as the game suggests (turning off valves, looking into the pod, etc.)
You will regain control of Cloud back inside the Shinra Mansion. Climb the stairs to the second floor and take the pathway leading to the right.
There is a bookcase that will slide out of the way as you approach it in this room (shown in the screenshot below).
Go through the pathway and down the spiral walkway. Follow the pathway along and you will find Sephiroth in a room near the end of the pathway reading about Professor Gast, Jenova and his past.
If you approach Sephiroth after the short cutscene he will tell you to just let him be alone. As soon as you leave the room the cutscenes will continue. Go back down into the basement after Cloud wakes up.
Follow Sephiroth back up towards Nibelheim - the entire town is now ablaze. Try to run into the house on the right after you speak with Zangan to continue the story.
The story then continues in the interior of the Nibel Reactor. Follow the pathway along until you find Tifa and then follow her into the chamber in the back. Proceed up into the antechamber for another cool cutscene.
After the cutscenes have concluded the game will return to your team on the second floor of the Kalm Inn. There are a few more lines of dialogue from the team before you can leave…
Best Bromance
Dialogue during this section of the game will influence the Gold Saucer Date side quest and obtaining the Best Bromance Trophy.
When Barret leaves the second floor and tells Cloud to get a move on:
| “Wait a sec” | No change |
| “Beautiful, just beautiful!” | + 3 to Barret |
| “Is that all?” | - 1 to Barret |
| “Right” | + 1 to Barret |
If you are looking to obtain the Best Bromance Trophy, select “Wait a sec” so that you can then select “Beautiful, just beautiful!” for the second option as it is worth the most points.
Cloud will be provided with a “PHS” which will allow you to change your party members any time you are on the world map or at a 
Save Point.
Go back up to the second floor after you receive the PHS and look in the cabinet. You will receive a message saying “Can’t reach it…” when you attempt to open it, but try a total of five times and Cloud will kick the cabinet to knock the item down, netting you one free Megalixir.
The team doesn’t really specify which direction they are now headed but the only place you can really travel to is the Chocobo Farm. If you are planning on obtaining the Best Bromance Trophy though you should adjust your party from the World Map and re-enter Kalm before leaving this area as outlined in the info box below…
Best Bromance
Returning to Kalm for some interactions during this section of the game will influence the Gold Saucer Date side quest and obtaining the Best Bromance Trophy.
Make sure Barret is in your party before you proceed.
There is a woman in the house to the right of the Kalm Inn. Speaking to the woman in Kalm who says that Mako energy is convenient, answer with:
| “Yeah, maybe” | - 2 to Barret if he is in your party - 1 to Aeris if she is in your party - 1 to Tifa if she is in your party + 1 to Yuffie if she is in your party |
| “You’re full of it” | + 2 to Barret if he is in your party + 1 to Aeris if she is in your party + 1 to Tifa if she is in your party - 1 to Yuffie if she is in your party |
There is a woman on the second floor of the same building. Speaking to the girl upstairs who thinks that the old life is better, answer with:
| “Yeah, maybe” | + 2 to Barret if he is in your party + 1 to Aeris if she is in your party + 1 to Tifa if she is in your party - 1 to Yuffie if she is in your party |
| “No way” | - 2 to Barret if he is in your party - 1 to Aeris if she is in your party - 1 to Tifa if she is in your party + 1 to Yuffie if she is in your party |
If you plan to obtain the Best Bromance trophy, your best strategy in answering these questions is to remove Tifa and Aeris from your party and answer the woman’s question with “You’re full of it” and the girl’s question with “Yeah, maybe”.
