Letter engraving can be done by hand with power tools or with simple hand tools. For homemade craft signs, country or rural signs, you can use small hand tools. For large commercial jobs, routers are typically used. Whatever tool you choose, the result typically relies on the complexity or style of letter you choose.
Handheld Rotary Tool
Handheld rotary tools utilize small, powerful motors to spin cutting bits of almost any shape or size. Install an engraving bit into the tool. You can use the tool like a pencil to engrave letters directly into the surface of the wood freehand or follow lines placed on the wood by a stencil. With a plethora of bits available, you can engrave small cursive letters or broad block letters, the choice is up to you. For even more stability, you can attach a plunge router base onto the tool, set the depth of cut and slide the tool over the wood for more accuracy.
There are all kinds of routers to engrave wood. These tools range in size, but most are big and unless you're experienced, can be hard to handle when engraving letters on wood. They work best if you have a template that they can follow to prevent accidentally routing outside the lines. Large production shops use an overhead router that has a stationary bit. You lower the bit onto the wood, and then move the wood, rather than the bit, to engrave the letters.
Old-fashioned carvers rely on the bench knife to engrave letters. This short, stubby knife has an angled blade with a sharp edge that comes to an abrupt point, which makes it strong. You can force this kind of a knife deep to cut along the outline of letters. A bench knife is relatively safe because of its shortness. You begin by cutting delicately with it. Once the letter outline is established, you cut deeper. You then chip the inside of the letters out with a small chisel, or leave them as an outline.
The bent spoon is another hand tool. It has a semi-circle tip that cuts a smooth, round bottom on letters. Start out by drawing the letters onto the wood by hand. Hold the tip of the bent spoon at about a 15-degree angle. Push the tool forward as you gently rock the tip back and forth. It will cut a clean channel on the wood, producing a fine, curled piece of wood as it cuts the letter. If the wood is hard and stubborn to cut, use a small mallet to tap the end of the tool.