While I've been designing guitars and thinking about building them as long as I can remember, I never just went ahead and did it. A friend of mine is a pretty good woodworker and just kind of pushed me into it with his enthusiasm about it. It was just what I needed to get some confidence, and I want to pass that on now that I have some experience under my belt. This is aimed at someone that's never done it before. I'll add to this as I receive suggestions. Everyone is encouraged to ask and answer questions in the thread.
These steps should give you an idea of how to build your own body blank from raw lumber, allowing you to save a LOT of money not having to buy blanks from someone else. You can apply the techniques and tools to make your project as simple or as complex as you'd like.
I'm making a guitar blank out of Alder. The final blank is going to be a maximum of about 20"x13". It's not really big enough for most bass designs, and if I were going to have a design that got too close to the edges, I might use narrower lumber and use more pieces. If you can make a two piece blank, you can make a three piece blank.
Enough of my long-windedness. Here we go.
There's a great hardwood lumberyard up here in Dallas where I get my wood. I can get a board big enough for three blanks for less than the price of a single blank from most of the supply shops.
We're going to use a piece I have left over for blanks. It's a piece of select alder in 8/4 thickness. There's better explanations elsewhere, but 8/4 basically means it's a minimum of two inches thick. Just convert the fraction.
Click thumbnails for the full-size picture.
We are going to need a few tools to get this done. If you have access to a workbench with a vise it would be great, otherwise you need lots of clamps and some imagination. You will also need the clamps for when you glue it. And while we are on the subject, no gluing process has ever been successful without glue. I use regular old wood glue from Lowe's.
NOTE: Woods have varying levels of toxicity, woods and sawdust can make you sick, give you a rash or cause allergic reactions. Some of these reactions can be developed over time. Research the wood you plan to use and take proper safety precautions.

This is a jointing planer. It's very long to make the wood as flat and straight as possible to allow us to join the two boards.

This is my neighbor's new toy. The guitar blank I'm making is a Strat style body, meaning that it's not going to be carved. Therefore it doesn't need to be two inches thick. We'll plane it down closer to the correct thickness with this. It's a nice tool. If you are thinking, "Yeah, but that's really expensive, too", I have a surprise for you.

I planed my other blanks with this. It cost about 20 bucks less than the power planer. Tools can be expensive, whether power or hand tools. Either will give you good results if you work at it, think about what you are doing, and be careful. One just takes a little more practice.
When you go to a hardwood lumberyard, they should let you dig through and find the wood you want. In this case I found what I was looking for: fairly straight grain with no big knots.

I've got about 80 inches left. I'll make two blanks out of it. First thing to do is to cut two 20 inch pieces off the end and put the rest away. I have power tools, but I just cut it with the hand saw.
So now that it's cut, time to figure out which way to orient the pieces. If you are going to paint it, stability and strength would be your top priorities in orienting the boards. In this case, I'm going for the invisible glue line.

Since the grain is so straight on the one side of the board, this is kind of a poor man's bookmatching (the technical term is slipmatching). This has a chance of looking pretty good if I do it right.
You have to plane both pieces square and flat. If you can do both of them perfectly the first time, they will fit perfectly together. I get both of them perfectly square and then adjust one to the other until they fit. If I think that the piece I'm working on is closer to perfect than the other, I'll work on the other piece.

Here's an action shot that my neighbor insisted on taking. It's actually a good thing because I figured something out as I was going along. You want to keep a wide base underneath you and just shift your weight, allowing the tool to do the work. With a jointing plane, you want to focus on keeping it flat. Therefore you need to make sure you are applying weight on the front of the tool at the beginning of the stroke and on the rear of the tool at the end.

Checking the square as I was going, I noticed I was really digging in on only one side. The next photo shows why.

Notice that I'm not keeping my feet underneath me, and I appear to be reaching with the plane? Let's just say that once I adjusted the handle on the vise I was no longer worried about being "injured" by it and was able to step closer and keep the plane level.
So we've got two pieces of wood here that are perfectly square all the way along the length where they will join. The big stuff is done, time to test fit them.

Meh. Not terrible, but it needs some work. I was worried about trenching it out and sort of overcompensated. Jiggling them back and forth helps find the crown, which we need to get rid of. There should be NO jiggle on the other axis. Don't trade one problem for another. Keep checking the square as you go.

Here's our join after some cleaning up. You can see the marks I made as I went, marking the high spots so I knew where to hit it with the plane. Sometimes it only takes one pass with the plane to fix a problem; this is where a bench vise becomes WAY more handy than clamps. I wondered if this join was good enough to get by with, so I clamped it on the ends to see. It's much better than it was before. Why not go ahead and try to make it even better? I'd hate to waste all this work and these nice pieces of wood just because I didn't want to spend a few extra minutes fixing it up.
A word on patience: NOBODY suffers from the urge to hurry more than I do. Sometimes you just have to fight it off. Once you've done it a few times, it's easier to be patient, mainly because you have to look at your previous work and you know where EVERY mistake is, even if nobody else sees it.
So anyway, after a little more work, I got it where I was pretty satisfied with it. Time to get the clamps ready.

I like lots of glue. I panic if I don't get squeeze out, because I worry that I missed a spot and I also have to fight the tendency to want to over-clamp to GET squeeze out. I've heard of squeezing all the glue out of a joint. While I've never done it, and don't even know if it's possible, I'm paranoid about it. Believe it or not, I didn't think I got enough glue on this once I got it clamped.

We are now all clamped up. An extra set of hands helps. You have to go fairly quickly when you are gluing, and you have to get the pieces in place because wood glue can set on you before you know it, so don't screw around when you are setting your clamps. A further word about wood glue: Don't wipe up the squeeze out in this type of application. The glue will come off with an old chisel or screwdriver when dry. There's no point in getting glue in the wood because you'll end up getting it in the blades of the planer.
We clamped a couple of pieces of scrap on the ends to make sure everything lines up. Those pieces will snap right off when the glue's dry.
EDIT: It has been suggested that more clamps would be better. More clamps at lower pressure is always going to be better than fewer clamps that are overtightened. Crushed fibers from over-clamping will ruin a joint and it will just get worse over time. Bottom line: If you have 'em, use em.

Leave it someplace to dry. I give it overnight at least. This one had about 18 hours. If you actually do this, go back and visit it proudly as often as you like.

Good morning. The glue is now dry. Time to take the clamps off, snap the scrap off, scrape the glue off it and run it through the planer. If you don't have access to a power planer, you've already cut your teeth at hand planing, and joining it was the technically difficult part. Thickness planing is more labor intensive just because you are taking off so much more wood.

Here's the blank fresh off the planer. I originally posted this picture massively sized so you could look for the join line. You'll have to take my word that the lines the planer left in it are easier to see. I'm no expert. You could do it at least this well your first time with a small amount of patience.
Because the two pieces of wood are kind of 69 bookmatched, the grain runs in opposite directions. I ended up with a little fuzz on half of it from the planer where it was running the wrong way. The last few passes I took really small bites to minimize it. It'll come right out with some sanding. I hit it with a random orbit sander, perhaps the most valuable power tool on the planet. At this point I donned the particle mask for safety; If I ever get a shaving in my lung I'll wear the mask during planing as well.

Here is the sanded blank in the sun with a little denatured alcohol on it to show the grain without raising it. It also does a good job of cleaning the sanding dust and stuff off the wood. It evaporates REALLY fast so I had to have the camera ready when I wiped it down. Just as an illustration of that, the picture below was only taken a couple of seconds after the first.
So that's turning a piece of wood into a body blank in 20 photos or less. I hope someone finds it helpful, or at least inspiring. I wouldn't be able to afford to build my own instruments if I had to buy pre-made blanks from some of the suppliers. I can't make my own pots or tuning machines, so now I can actually afford to buy them with all the money I save.
By the way, this didn't take an extraordinarily long time. Even with both my sons in the garage and stopping to take photos it only took a couple of hours. If you wanted to you could churn out a bunch of these in a day and just have a stash.
So go to it.