You will need:
Access to a vinyl cutter
Silk screen frame
Step 1: Your Image
Get the image on to the computer somehow - take a picture of it, scan it etc. This instructable assumes you know how to get that image onto vinyl. If you don't, find someone to do it for you. Remember to reverse the image. You can see the before and after photos here.
You should now have a piece of vinyl that has your design cut into it and is attached to the backing. It is your vinyl stencil.