In practice though, recognition is what matters, and it's a long and complicated process to get recognised. This instructable will take you through the steps involved, from acquiring a territory to resigning from your presidency! (Yes, that is a necessary step if you want the country to outlive you.)
Step 1: Acquire a Territory
Ideally you'd use an uncharted island, so you're not stealing land from another government. Unfortunately, these don't exist nowadays, and as soon as one is created it's claimed by a larger country.
So we're gonna have to steal from a government, why not go the whole hog and steal the land outright? Adverse posession, or "squatters' rights" is another way to get the land but, aside from the irony of the government authorising your ownership of the land just for you to take it from them later, there are drawbacks. Firstly it's not definite. Some countries don't allow it at all, and most that do favour the landowner. Also, it takes too long.
A compromise, then, buy the land from someone then claim the territory from the government when you publish your declaration of independence.
In any case, there are some points to consider about the land.
Many people believe an island to be the ultimate symbol of independance and as such the perfect place to start a country. This is not necessarily the case, and on the contrary, a land border would make a lot of sense, especially in the initial construction phase and, once you're recognised, for easier trade with that country.
A definite border is a must.
You'll need to protect your border, with a fence, wall, moat or something to stop illegal immigrants and invading armies. This is most likely the reason islands are favoured, as the shoreline acts as a firm definition and protection. A good compromise might be a peninsula, you have the land connection and the protective water surrounding.
It should be located by the sea for trade with foreign countries besides the one you were formerly part of.
It should be good farm land - you don't want to rely on foreign imports of food. I don't know much about the availability of good farm land on the coast, you might need to compromise here too.
It doesn't have to cost very much - as long as it's big enough to hold at least one person it'll do. On the other hand, as I already mentioined, it should be decent quality for agriculture and, as we'll see in the next step, large enough to fit a respectable population. The Vatican City, incidentally, is the world's smallest country at about 110 acres.