Three methods are commonly used for lettering wood: Vinyl lettering (the most common), raised wooden letters that are glued on and letters that are routed into the wood itself. Any one of these methods can be accomplished at home with some patience, a little preparation and the right materials. The best method for lettering depends on what design you prefer.
Measure and decide how tall and how much room you have on your wood for your letters.
Take the measurements to a local sign shop and give them to the proprietor. Choose your font style and a computerized machine will cut the letters out to your specifications.
Peel off the back of the vinyl and place the letters on your wood, sticky side down. They will be all in one piece with complete sentences. The letters are sandwiched between two materials. After peeling the vinyl and sticking the letters on the wood, smooth the letters down with your fingers, and then peel off the semi-transparent paper exposing the letters.
Purchase a kit of wooden letters according to the style and size of font you desire.
Lay out a straightedge along the edge of the wood where the bottom of your letters will be aligned. Lay out your letters according to spacing demands. Mark the locations of all the letters on the straightedge.
Spray the back of the letters with the spray glue as you pick them up one at a time, and place them back down corresponding to the marks you made on the straightedge.
Place a v-groove router bit in a router and set the depth at 1/4 inch.
Clamp both ends of the wood to a tabletop. Draw the letters on the wood by hand or use a stencil. Use a number no. 2 soft pencil to draw the letters, and make them dark so you can easily see them.
Turn on the router and gently ease the bit down into the wood. Follow the lines that you have drawn.
Spray glue and wooden letter kits can be purchased at home improvement stores.
Make sure there is adequate ventilation and always wear proper breathing protection when using spray glue. Always wear safety glasses when operating a router.