Attach your holer to your drill and drill the entryway hole. I make my holes 1 1/2" for bluebirds and larger for other birds. Here's a helpful chart that will help you decide which size hole you will need to drill for your birdhouse: Hole Chart
Remove seeds from interior of gourd. Some people like to leave the papery membrane inside of the gourd for birds to use for nesting material. I usually scrape the inside of the gourd clean because removing the papery membrane makes for a drier gourd.
Lightly sand the entire gourd including the sides of the entrance hole.
Drill holes in the neck of the gourd to attach your hanger. A good functional hanger is a piece of an old clothes hanger. The top part already has a hook and can be squeezed closed to prevent your birdhouse from being blown down by the wind.
Drill three or four drainage holes in the bottom of the gourd. This allows any moisture to drain out and prevents the contents of the birdhouse from becoming foul.