Essentially it is the process of assessing the needs of your students (or student if you are doing this for a 1-to-1 lesson). In other words, what they know already, what they want to know, and finally what interests them.
You need to find out about your students. The first thing to ask is:
There are many reasons why people learn English: to go to an English speaking university, to do business with foreign companies, to live in an English speaking country, to go on holiday to England, to watch Hollywood movies in the original language... This will simply lead you to teaching them what they need to know whether that be Business English or English for Academic Purposes or English for Special Purposes.
The next thing you need to know is what your students already know - there's no point teaching them the ABCs when they can read and understand Shakespeare.
To find this out one common technique is to give the students a placement test. This is merely a series of questions on English grammar and vocabulary which get progressively harder and more advanced. Where the student begins to falter is where there level is. After a test like this you will be able to place your students roughly into the right level from Beginner to Advanced.
In some cases of course placement tests aren't practical especially in the cases of private lessons with just one or two students. An alternative here is simply to talk to the student about general topics. By doing this you'll get a rough idea of how good that student knows English. Of course it isn't perfect but experienced teachers are often able to understand very quickly the level a student is at.
Teacher Tip: note that asking a student how good their English is is pretty much a waste of time. It's very difficult if not impossible for most people to make an accurate assessment of their own language abilities!
The final step is to find out the interests of your students. For example, if you ask class of teenagers then you'll likely hear subjects like music, fashion, movies and so on. If you ask a class of business people you may here things like politics, travel, current affairs and so on.
Once you have made the needs analysis you can prepare useful and accurate lessons for the class. This may be as simple as choosing the right level and kind of coursebook for them, or it might mean creating a whole syllabus for the year and each lesson within that.
Whatever you do, taking good note of the needs analysis will mean:
Every single new class or student needs a needs analysis. This will make sure that what you teach them:
And to reiterate what was said at the beginning of this article, the importance of the needs analysis cannot be overlooked.