Make a list of your child's favorite things. Include her pets, friends, toys, outfits, relatives, teachers, TV shows, books and best-loved foods.
Decide what the purpose of your story will be, and how her favorite things can be incorporated. While most stories for kids fall into the category of simply being silly and entertaining, they can also be used to address childhood fears (i.e., monsters in the closet); impart gentle messages (i.e., patience, kindness and tolerance); or encourage problem-solving (i.e., mysteries about missing socks).
Listen when your child talks about his day. This will give you clues to what he's thinking about, what kinds of games he's playing with his friends, what he's learning at school, and what he wants to be when he grows up. Ask questions and invite him to engage in "what if" games. While you should be doing these parent/child bonding exercises even when you're not trolling for book ideas, the answers he gives will help you develop a personalized plot that also resonates with the here and now.
Visit websites like KidsCom, Blackdog4Kids, Corey Green, Creative Juices and Scholastic's Story Starters (see Resources). Each of these venues provides writing prompts if you're having trouble getting started. In addition, they discuss age-appropriate themes, and include vocabulary guides. Teaches used them extensively in the classroom to encourage students to use their imaginations.
Outline your book before you start writing it. The outline should briefly describe what happens in Act 1 (the beginning), Act 2 (the middle) and Act 3 (the conclusion). An easy way to do this is to decide how many pages the book will be and divide that number by three. Once you start writing, you'll then know how many pages should be devoted to each act. Your outline should also list the supporting characters who will be in the plot. Your child, of course, should clearly be the main character and appear in every scene.
Collect photographs to illustrate the book. If they are already in a digital format, they can easily be uploaded into your Word document. If they're not in digital format, you will either have to scan them to .jpegs (if you have a home scanner) or take them to a venue like Kinkos, where they can be scanned for you and put on a CD or flash drive.
Start writing! Personalized books for children are usually written in the third person. You may want to experiment, however, and see if writing in the first person makes for a more effective way to tell the story. Make frequent mention of the child's friends, pets, and toys, and make sure there is more action in the storyline than dialogue. Kids love lots of pictures--especially of themselves--so don't be shy about using them.
Decide whether you want the book to be printed out as a hard copy or put on a CD or flash drive and enjoyed on the computer. If you decide to print out the pages and put them in a colorful binder, it's a good idea to insert each one in a plastic protective sheet to protect it from spills or sticky fingerprints. If you decide to present the book in an electronic format, you will be able to create continuous pages that can be scrolled through, rather than turned. Your photographs will also reproduce better on a screen than on paper, unless you're willing to go to the expense of printing everything on glossy sheets instead of bond. Another advantage of an electronic medium is that it can be emailed to relatives, so you don't have to worry about forgetting to pack the child's book for a trip to Grandma's or having it get lost during transit.
Proofread the book thoroughly before you print it out. Recruit extra pairs of eyes to proofread it as well.