Mundane Item Crafting, Step-by-Step

These rules use exclusively the Player's Handbook and Dungeon Master's Guide. I'll gladly upvote answers that take on official sources beyond these.

1. Get artisan's tools (PH 129) (5 gp; 5 lbs.). Luckily, you might only ever need one set, though check with the DM. The description says that a set "includes the items needed to pursue any craft (except alchemy)." It says any craft not all crafts, so making characters buy artisan's tools for each Craft skill specialty isn't just the DM being a jerk. But you should always have artisan's tools, as it's better to be safe than sorry. Making Craft skill checks without artisan's tools means taking a -2 penalty to Craft skill checks "if you can do the job at all," which is code to permit the DM to say No when a naked character tries to use found improvised tools to make a Craft (gemcutting) skill check ("Axebeard MacDwarf'll just hit the raw diamonds with other raw diamonds!") or a Craft (painting) skill check ("The human body contains over 30 different fluids—one must be puce!").
2. Determine if the Craft skill is appropriate. If the plan is to make a spoon, and only the Craft (weaponsmithing) skill is available, ending up with a weaponized spoon, while possible with a generous DM, is unlikely. What skills can be used to create certain items is sometimes hotly debated (note the lack of ammunition on the PH 71 table), and it's debatable what some Craft skills mechanically even do (e.g. Craft (gemcutting)). Further, the Craft skill encompasses making works of impractical art, meaning the painter and poet use the same rules as the blacksmith and stonemason. (By the way, alchemical items can only be crafted by spellcasters; that's shameful and should be house-ruled, but that's what the game says.) Anyway—and finally—whether it's the Craft (mapmaking), Knowledge (geography), Profession (cartographer), or Survival skill—or any of those!—to create a new map (maybe even one suitable for framing) is a mystery. (In my campaigns, I like creatures to use the Craft (mapmaking) skill because that lets them sell maps they've made, but ask your DM.)
3. Determine the item's price. Usually, this is available. If you want something masterwork, add the masterwork cost to the item now; adding masterwork is not possible post-crafting. Sometimes, however, you can't find a price. Art objects (DMG 55) are particularly weird, essentially letting the crafter set the price for the finished item. How far down the weird little crafting rabbit hole the DM wants to go might mean craftsmen who make embroidered-and-jeweled gloves always make embroidered-and-jeweled gloves priced between 1,000 and 4,000 gp. (My cousin the painter tells me art prices depend on where the art's sold not on art quality, so being able to set the price of her art before she started would seriously blow her mind.)
4. Buy raw materials. Raw materials are usually purchased, and usually cost one-third the price of the finished product. DMs of realistic campaigns will quantify raw materials (e.g. greatsword raw materials, oil painting raw materials, etc.), DMs of cinematic campaigns won't (e.g. Craft (weaponsmithing) raw materials, Craft (gemcutting) raw materials, even just raw materials proper). Crafting in D&D 3.5e is such a chore I argue in favor of generosity and the cinematic.
5. Determine the Difficulty Class (DC). The key is using the chart "or have the DM set one." The PH has nothing higher than 25 (71), and I can't find in the DMG any higher than 40 (76), so talk the DM down if he sets DCs at 120 or something… or don't; see below. If you must, have him compare anything to the crushing wall trap (DMG 74), which is only DC 35 and explain how you're painting the duke's portrait, not building a death machine (unless the duke's portrait is a death machine… then never mind). The crafter can choose to increase the DC by 10; this will craft the item more quickly but, obviously, make success less likely. Ask the DM if this +10 can be added multiple times; I allow it as a house rule.
6. Determine how much time's available. If you only have a day, convert the item's price to copper pieces (i.e. multiply its gp price by 100). If you have a week, convert the item's price to silver pieces (multiply its gp price by 10). As a house rule, I let PCs also track progress by the hour (i.e. multiply by 800); less than an hour I rarely bother with unless it's something weird like a flirt sketch.
7. Make a Craft skill check. The DC's already been set. Success means you've spent raw materials and have made progress. Failure by 1 to 4 means no progress. Failure by 5 or more ruins half the raw materials (even if you're working by the day). I'd suggest taking 10, but the DM may rule that doing so is generally impossible (e.g. "Crafting is always stressful") or impossible given circumstances (e.g. "It's difficult to work whilst the orcs whip you").
8. Determine progress based on the Craft check's result. Multiply the check's result by DC needed to craft the item; that's 1 week's progress toward the item in silver pieces, or 1 day's progress toward the item in copper pieces. If you meet the item's price, it's completed. If progress is double the item's price, the item's completed in half the time; if progress is triple, one-third the time; and so on using D&D 3.5's rules for multiplying (PH 304).

Let's Craft Scale Mail!

Axebeard MacDwarf is Int 10 with 7 ranks in the Craft (armorsmithing) skill. He has masterwork artisan's tools. He has a +2 racial bonus to Craft skills related to metal, and there's metal in scale mail. His total skill bonus for the Craft (armorsmithing) skill when making scale mail is +11. MacDwarf buys scale mail raw materials, costing an inconvenient sum that the DM permits him to acquire for only 16 gp. The DC for making scale mail is 14. MacDwarf has a week, so he takes it, converting the 50 gp price of scale mail to 500 sp. He takes 10 on the Craft (armorsmithing) skill check for a result of 21. He's made 21 × 14 = 294 sp of progress on his scale mail. Give him another week, and he's done. If he wanted to—or if he was interrupted—, he could track progress by the day, and by taking 10 make 294 cp of progress per day; it will take MacDwarf more than a week if he takes individual days to complete the scale mail at that pace, however.

Let's Craft A Picture of That Lady!

The Crimson Lothario wants to impress a lady. He is Int 18 with 10 ranks in Craft (painting) and has Craft (painting) artisan's tools, for a total bonus of +14. Crim set his own price on the painting of 100 gp, and the DM lets him spend only 33 gp on raw materials. Crim's player asks the DM what the DC for nice painting is. The DM consults the table on PH 71 and picks 15. Because he doesn't have a model to work from, the DM rules Crim can't take 10. Crim wants to work by the day (he's got adventures to go on, after all) so the painting's value in cp is 10,000. The first day he spends painting Crim rolls a 15 for a result of 29, making 15 × 29 = 435 cp of progress on the painting. After he returns from an adventure, he has a week off, so he paints and rolls a 3 for a result of 17, making 15 × 17 = 255 sp progress on the painting. Hey, a few more weeks (like, three) and he'll be done.

"Wait a minute. That means…?!"

If you've gotten this far, you might have noticed some—let's be fair—strangeness in these rules. You've noticed that the higher the Craft DC of the item (i.e. the harder it is to make), the faster it can be made. So setting DCs arbitrarily high isn't always bad thing if by taking 10 the craftsman can still beat the DC. Yes, that means most DMs will rule it's faster for a craftsman to make thieves' tools than it is 10 ft. lengths of chain because most DMs will set the DC for the thieves' tools higher (probably a high quality item) than the DC for the chain (probably a typical item).

That's kind of okay. The number of folks who can consistently make lengths of chain far outnumber the folks who can consistently make thieves' tools, so it's not like there's a thieves' tools glut and chain shortage or anything. But it is still weird.

Welcome to D&D 3.5e economics.

"O, that's too much work!"

You're right. That's why there are shops. But, besides that, you can make it less work. Untrained hirelings cost 1 sp per day, and the Craft skill can be used untrained (PH 64). Your hirelings will need artisan's tools (probably) but using the rules for aid another (PH 65-6) should allow you to simply buy success. The DM may limit the number of assistants you can have (perhaps to just 1 if the DM's stingy about the bonuses from favorable circumstances (PH 64)), but it's an option, especially if you're that close to being able to beat the DC by 10.

The best way to speed this process is via the spells fabricate [trans] (PH 229), minor creation [trans] (PH 253-4), major creation [trans] (PH 252), and true creation [trans] (SpC 224). The DM, however, when using even these spells may still mandate appropriate Craft skill checks for complex items.

"But where does firewood come from?"

You chop wood with an improvised tool and use the Craft (carpentry) skill check untrained. Firewood costs 1 cp; fractions round down; one-third of a cp is 0 cp; raw materials are free. The DM rules that crafting firewood is DC 5. Spend the day karate chopping trees, taking 10 on the Craft (carpentry) skill check for a result of 8 x 5 = 40 cp of progress made per day (essentially, you're making 1 check every 12 min.). Make 40 cp (800 lbs.) of firewood in a day. Sell that firewood for half price (as per D&D Econ 101) and earn 2 sp. Buy a poor meal (1 sp) and 2 mugs of ale (8 cp total) and put the remaining 2 cp away for a rainy day. Congratulations, peasant. You're alive. I hope your family home isn't threatened by an owlbear so you can continue to take 10.

Question 1) You can make the checks when he goes back, or he can make the checks himself every day. The business works even if the owner isnt there to activelly direct the workers, as it is assumed you hired people to make your business work, and your earnings are your profit after you paid them and the business paid all it's cost. Though, if the hero isnt there, you should apply the 7 days absence penalties as normal, which could ruin the business after a while (which can be fixed with a manager).

Question 2) The manager's job is to prevent the absence penalties and roll for the random events instead of the hero, but the earning checks will happen wether or not the hero is there. Personally, i prefer to roll them after they get back, we count the days away, i roll a couple of random events, see how many checks they have to make, and they take 10 on all of them.

Question 3) As said above, the checks will happen regardless of his presence. But that is a good question because if the hero can communicate at distance, the absence clock is reset everytime he communicates with them. That way they know what to do and they know their boss is still alive.

Question 4) Everything other than GP you will have to pay the half-price for it. If i recall correctly, labor and goods are 20 gp (half price is 10 gp), while influence is 30 gp (half price is 15 gp), and magic is 100 gp (half price is 50 gp). So, when you are earning capital you dont gain any GP, but you are not actually losing any either, because the price for rooms and hirelings are based on the full cost of the capital, so if you take your time to earn the capital, you can buy things at half the cost. See that as an investment of your money, in the long run you will have discounts to build other rooms and hire more people.