Determine your target demographic. For instance, are you putting together a story book that parents can read aloud to toddlers or are you writing a book that children can comfortably read themselves? The age of your target reader will influence the vocabulary, sentence structure, use of color and the number of pictures you use to support the text.
Develop a plot. The best way to do this is to think back on the stories from your own childhood that especially resonated with you. Perhaps these were fairy tales, myths, legends or Bible stories. What they all have in common are timeless themes and clearly defined characters that you really cared about. If you need help getting started, check out websites such as Scholastic's Story Starters or A to Z Teacher Stuff (see Resources) which provide creative writing prompts to get those brain cells sizzling.
Decide on a genre such as science fiction, fantasy, western, comedy, drama, mystery or coming of age. The best way to do this is to think about the kinds of books you really like reading yourself. To write well, you need to be aware of what has already been done. Chances are that if you are a die-hard mystery fan, you're already aware of many of the nuances of this genre so you can replicate them in a story of your own.
Research what has already been done in your chosen genre. This means trolling the aisles of neighborhood bookstores and familiarizing yourself with websites such as the Children's Literature Comprehensive Database. You should also pay attention to what the young people in your life are reading and talking about in order to make your book relevant to their lives and interests.
Identify who your lead characters will be in the book. Every story needs a protagonist (hero) and an antagonist (villain) and, further, they need to be equal in their level of power so that it will be a fair fight from start to finish to keep readers guessing until the very end. If you are writing a personalized book for the young children in your life, you may even want to make them the central figures in the plot who solve the mystery, save the universe or win the princess.
Identify a setting for your story. For instance, is it going to be somewhere common and ordinary like a suburban backyard or will it be something mysterious and dangerous like another planet? Whatever you decide, you must also define the parameters of that environment which will, in turn, govern what your characters can and cannot do.
Establish the point of view. Most stories are written in the third person; some are written in first person. Whichever method of delivery you choose, though, it should be clear to the reader whose viewpoint is prevailing. If you incorporate too many different points of view, this is called "head jumping" and is frowned upon by editors.
Outline your book before you start writing. A good book must include a beginning, a middle and an end. Many times, though, new writers make the mistake of spending too much time developing back story for the introduction, meandering around aimlessly in the middle and causing it to sag, and then throwing together a slap-dash finish that usually relies on a high level of contrivance to sew things up. A good strategy is to decide how long your book will be in terms of pages, divide it by three, and then make sure that the beginning, middle and end all have an equal number of pages.
Illustrate your story book with clip art images. The younger the reader, the more pictures and color you need to supply to hold their interest. Note: if you are planning to submit your manuscript to a publishing house, they will only be interested in the text itself, the exception being if you are a photographer or graphic artist and plan to submit your own designs. Otherwise, they will use an artist in-house or hire a freelancer to illustrate your story.