Conversions are just a part of miniature gaming.  Even with very extensive active lines it is often hard to come up with a suitable miniature for some PCs and NPCs.  If you want a variety of Star Wars miniatures then conversions are your only real option.  Neither the now defunct Wizards of the Coast line nor the out of productions West End Games lines were very suited for the game.  Put together they are somewhat more useful if you can ignore the fact that the Wizards of the Cost miniatures are a bit larger than the older West End Games lines.  Conversion is your best option for aliens in particular.  Since many of the Star Wars aliens are roughly humanoid in size and shape that means anything from adding a couple head tails to re-sculpting things like heads and hands completely.  This can be a daunting task but if you start out with some simple conversions you will be able to learn as you go.  Do not try something as difficult as a Quarren for your first conversion.  Stick with Twi'leks and Duro.
There are a number of types of conversions.  Head swaps are where you take the head from one fig and put it on another.  These are typically more expensive conversions unless you are using Games Workshop plastic kits because you can often ruin one of the minis trying to remove its head.  Weapon swaps are where you take a weapon from one mini and put it on another.  A number of companies make weapon sprues which makes this process easier and more affordable.  Re-sculpts are more advanced since they involve doing sculpting with epoxy putty.  Most of my conversions are re-sculpts.  Often head swaps or re-sculpts to the head to make a new alien out of a human miniature.  Still, another type of conversion is a kit bash.  Kit bashed minis are my term for a minis made out of several parts of various Games Workshop plastic miniature kits.  Most of my kit bashed minis use the Empire Militia, Catacan Jungle Guard, and Dark Eldar plastic kits with other parts taken from Games Workshop weapon packs.  Then there are combinations of the above.
It helps to have a number of tools like hobby saws, dremel tools, needle files, small drill bits and other objects you may find handy.  Below if a picture of some of my sculpting tools.

Another thing that helps is epoxy putty.  You can get a type of epoxy putty at most hardware stores but you should avoid it because it is usually highly toxic and sets up very quickly.  What you need to look for in Kneadatight epoxy putty.  Kneadatight has been formulated for sculpting and is not as dangerous as off the shelf putty.  It can also be worked for a couple hours.  You can get it at most large game stores that carry miniatures or you can also order it from a number of miniature companies.  The most common type of Kneadatight is the Blue/Yellow which is often called "Green Stuff".  Most miniature companies call their original sculpts "Greens" because of the prevalence of the Blue/Yellow putty.  There are a few other types like the Blue/White putty sometimes called "White Stuff".  The putty comes in flat ribbons and you just cut off the part you need and mix it together.  It is recommended that you cut the small section out of the middle where the two putties come together because unless you have a very fresh batch this section of the ribbon will already be set up and will leave a hard bit in your soft putty which can cause problems for you.  Another thing you will need is a lubricant for your tool to keep the putty from sticking to your sculpting tool.  It may sound strange but the most common lubricant among sculptors is spit.  That's correct.  Saliva.  Another no less shocking lubricant is the oil off your skin.  In particular your nose.  The advantage of spit and nose oil is that you always have it with you.  For those of you that would like another alternative water and Vaseline can also be used but Vaseline is messy and you must keep cleaning the bit you are working on.  A word of caution.  There is another common putty that people often use for conversions and sculpting called Miliput.  If you are using this putty do not use spit or skin oil because Miliput is toxic and can cause bad reactions.  Also people have been known to be allergic to all epoxy putty so always exercise caution when working with them.  Below is a picture of Blue/Yellow and Blue/White epoxy putty.

Below are various conversions I have done for Star Wars.  They have all been painted by either myself or my wife Michelle Miller.

The Twi'lek and Duro were converted from the Games Workshop Dark Eldar plastic set.  For the Twi'lek I used the Dark Eldar head with the top knot.  I cut the top knot off and added the head tails and headband out of "Green Stuff".  The short cape is also made out of "Green Stuff".  The Duro required an compleat head sculpt that I did seperately then added to the miniature.  On both the Duro and Twi'lek I cut a lot fo the spikes off the Dark Eldar armour and guns to make them look a bit less ridiculus and more in line with the Star Wars genre.  They also look less like Dark Eldar that way.  I also cut the gun barrel on the Duro down quite a bit so it looked less like a sniper rifle and more like a regular blaster rifle.  I left the gun long on the Twi'lek because I wanted the sniper look for the mini.  The Kuzbaz is one big kit bash and resculpt.  The legs are from the Games Workshop Catacan Jungle Guard box.  The body and arms are from the Games Workshop Empire Militia box.  The head is from a 1/32 scale model of Anakins Pod Racer by AMT Ertl.  The Kuzbaz trunk is sculpted from "Green Stuff as is the cowl arround the bottom of the head.  The gun is a Games Workshop Las Pistol from an old weapon spure.  I cut a sword off of the gun hand so that part of the mini is a weapon swap.  The fact that I used the head from the Anakins Pod Racer model is a bit of a joke between myself and a friend of mine.  We have a contest for the most unusual modeling uses for parts from Anakin's Pod Racer.  We often use it to detail bases but my friend had to admit that using Anakin's head for this conversions was something that never struck him. 
The Duro and the pink Twi'lek here were converted from plastic Games Workshop Necromundia Gangers.  The Duro has a compleat head re-sculpt.  The Twi'lek was resculpted by filing down the hair and adding the head tails with expoxy putty.  The blue Twi'lek is convered from an Ikore Void Militia miniature.  The miniature was a bald human so all I had to do was sculpt the head tails with "Green Stuff".
This Kuzbaz was converted from a Ral Partha thief.  It was an easy conversion that only took about ten minutes.  First I cut the face off the thief.  Then I made a tear drop shape bit of green stuff and stuck it on where the face use to be.  Then I took a small sewing pin and widened out the bottom of the tear drop shape to form the opening on the snout.  I then took the same sewing needle and put the small holes going up the snout.  The goggles are made of two little balls of green stuff that I took a round tool and poked holes in then I flattened them out a bit with another tool.  The strap on the side of the goggles was cut in with an exacto knife.  After the putty set I based it and painted it.  One quick Kuzbaz.  If your wondering what a Kuzbaz is then your not a very big Star Wars fan are you?  No really the Kuzbaz is easy to miss unless you are fairly big fan.  He's from "A New Hope" (The first Star Wars film).  You see him in the scene where Luke and Obi-Wan sell Luke's speeder.  He is dressed all in black and informs is calling in the Storm Troopers on the heros.  The conversion is easy and everyone should do one.  Get up from your computer right now and make one.  Don't come back until you have one to show me.:)
The Nagai is a race from the Marvel Comics Star Wars series detailed in Star Wars Gamer #1 on page 63.  This is not much of a conversion.  All I did on it was to cut off the big spikey bits that look stupid on the Dark eldar.  This is the same head I used for the female Twi'lek sniper pictured at the top of the page.  The middle miniature is a Lightly armored Mandalorian that is kit based from a number of Games Workshop plastics then re-sculpted with "Green Stuff".  The last one is a bounty hunter I kit bashed from a number of Games Workshop plastic kits for a "Tales of the Jedi" era game I ran a while back.  Below is a pic of all the bits that I used to make him.  There are also bits from the AMT Ertle "Anakin's Pod Racer" that did not make it onto the diagram.  
 
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