Start by cutting out your tree. This one is 4.25" high:
Lay the tree onto a square or rectangle of background fabric. (I made mine extra big because I'm not sure what I'm going to do with my tree and I wanted to have some fiddling room.) Lay your ruler on top of the tree and slice through the background fabric.
Set that piece aside. Cut the background on the other side of the tree. (You'll end up with a leftover tree shape of background fabric - you can then use that to make another tree and it goes on and on.) This is what you need now:
Sew the tree to the smaller piece of background fabric. I do actually pin the layers together. It doesn't matter where you place the tree - with this method you'll always have extra background to cut off. I highly recomment that you press towards the background.
Trim the excess background (follow the line of the tree) and add the other bit of background. Take a strip of background fabric and insert a strip for the tree trunk. Keep in mind that the sides of the tree are going to shrink up with the seam allowance.
Sew the trunk portion of the block to the tree part. And, voila, tree.