Shrink plastic is a special plastic sheeting that shrinks approximately 50% when heated. It is made by several manufacturers and can be found in most craft and stamp stores. It comes in three varieties-clear, opaque and black and usually comes in 8 1/2" x 11" sheets.
First lightly sand one side of the shrink plastic. Sand top to bottom and then side to side until the entire surface has be covered (this is more important when using colored pencils than it is if using markers because the pencil lead needs something to grip onto). Stamp the image onto the sanded side. Next, color the image in on the sanded side. Cut out the image (if desired) or cut a border around the image. If you intend to make earrings or anything else that requires a hole, punch them now - the plastic will be too thick to punch through later. Place the shrink plastic into an oven heated to the temperature stated on the package of shrink plastic or heat it with your heat gun. It will curl up first, then shrink and flatten out.
If using a heat gun, the air from the gun tends to propel it across your work surface. You will also need something like an awl or a long nail, to hold down the shrink plastic.
If you can't find permanent ink, you can use any heat set ink like fabric or pigment ink but you must color the image in on the unsanded side. Be careful when you do this because your stamped outline will remain wet until the plastic shrinks.
Remember that colors intensify after the plastic shrinks so everything will appear darker than it was when you first colored it in.