As usual, I will deploy to the local machine (your desktop or laptop) and then to Heroku. The steps are quite similar except for one or two minor differences.
For development purposes we would normally run it through the command line using the built-in web server. However before we do this, we need to set up the database. I assume that for this application you would have installed MySQL.
$ mysql u <username> -p <password>
Then do the following:
mysql> create database colony;
This will create the database.
> require 'models'
This will require in the necessary classes for creating the database tables.