First, I embroidered a piece of tie-dyed fabric and affixed it to the back of my jacket with safety pins. For the tie-dye, I twisted the fabric into a coil and cinched it with elastic bands. Then I just followed the instructions on the dye packet.
Once the fabric was dry, I drew my rocking-horse design on it in pencil. From here on it helps to have embroidery experience, but the backstitch is pretty easy to learn. I used it to create a continuous line, and I added details, like sequin flowers, to the hair. The embroidery hoop you see below helped keep the fabric taut while I sewed.
For the collar I used some lace fabric that I bought at a thrift store. Fabric stores often have discount baskets for smaller swatches; otherwise, I recommend doilies or tablecloths. I cut the lace in half and pinned it to the jacket collar. (It helps to pin before you stitch to prevent mistakes.) For detail, I sewed an assortment of sequins into the lace. I did the same for the inside of the cuff.
I bought a couple of coin purses from the junk shop and made them into elbow pads by turning them inside out, unpicking the stitches, and cutting them into the right shape.