Trade normally, take prisoners, sell loot. Once you got some money buy cheaper under 50/unit items for caravans, You won't be loosing money all the time, don't got for expansive yet. First caravan you will always loose money on that's how you get the "get trade patent quest". If you see caravans making profit, keep going until you can buy a trade patent.
Hmmm... am I, bychance, having a bug? Because every time I finish off my caravan, I get a message that my total profit is a number, and I only get that number. Should I be getting back my original investment AND the profit? Or not?
The number you get on screen after bringing caravan to a city is what you spent on caravan+ profit from selling.
The trade patent work for whole map, it's not tied to specific cities.