Buy wooden beads that have not yet been painted or varnished. Beads made from soft wood, such as dowel, will be easier to carve than those made from hard wood.
Use the tip of the penknife to carve the facial design into the wooden bead. Start by chiseling out two holes for the eyes at the top of the bead. The eye holes should be quite deep to give a raised impression to the nose.
Chisel another deep hole at the bottom of the bead for the mouth. This hole should line up with the mid-point between the two eyes and should be wider than either of the eye holes.
Scrape away wood from the section between the eyes and the mouth. Aim to create a nose-like ridge running from the middle of the eyes to just before the mouth hole.
Paint or varnish your carved wooden bead to protect the wood from damage by rain.