Step 1: Shape the Head
Draw a rough horse head shape and cut it out.
Take a back saw or table saw and carefully square off one side of an old broom handle. You may also want to cut down the handle fit your little rancher.
Sand, stain or paint to match your preferred breed. If you've got expensive wood and knots are scarce, you could paint an eye or glue on a big "wiggly" eye from the craft store.
Attach the head to the stick. I pre-drilled the holes and used 2" long brass screws.
Step 2: Add Features
Be creative with the ears and play around with different shapes and locations. They can give your horse quite a unique personality.
The mane is three pieces of yarn braided with 4" strands half hitched in the middle of the main braid at every turn. This is the most time consuming part but makes it less likely to be pulled out by rough riders.
Mane color and length are again at your discretion (or lack of patience).
Staple the finished shag rug type mane along the horse's back. It also helps to cover the screw heads in the broomstick.