1. Write assignments.
I mean write a clear, detailed, dated, legible assignment for every student, every lesson. Require your students to have some sort of blank manuscript or assignment book that you'll write the assignments in. (Don't hand out loose, individual sheets of paper). This is the cornerstone of the lesson. Use the lesson time to evaluate the student's needs (areas requiring attention/improvement). Then write an assignment that will address and strengthen those areas. Approach it like a doctor evaluating a patient, making a diagnosis, and writing a prescription for the correct medicine or course of action. (Of course, as a guitar instructor, no one's life hangs in the balance, so don't take yourself too seriously, either!)
The assignments should be written so that if a parent or another teacher looks at a student's assignment book, they can plainly see what the student should be working on. This provides a documentation should your curriculum, or the student's progress, ever be called into question. It also makes it easy for another instructor to substitute teach for you. Best of all, it generally yields better result from the students, as they can efficiently practice exactly what they should be working on.

While we're on the subject of keeping things documented, allow me to extend this recommendation to paperwork in general. I strongly urge you to keep careful attendance records, and detailed documentation of lesson-related financial information. Come tax-time, or should a dispute ever arise with a client regarding payment, the benefit of accurate, well organized financial and attendance records is obvious.

2. Require proper technique, and reading of traditional notation.
I feel this addresses two increasingly common mistakes that even good teachers sometimes make:

• Not fixing certain flaws in students' technique quickly enough. Maybe this stems from the teacher's fear that demanding too much too soon will cause a student to quit. However, technical flaws turn into seriously entrenched bad habits if not corrected early. Conversely, if you clean up technique from the start, the student soon has a clear path to steady progress. When it comes to a student playing in a physically ill-advised manner, deal with it sooner rather than later.
  
• Not requiring the development of basic reading skills. With the popularization of "tableture" style notation, traditional reading has taken a back seat. From a pure guitar playing standpoint, I don't have much of a problem with this. (And clearly, reading of "Tab" must also be included in your curriculum.) You can do lots of wonderful things on the guitar without the ability to read music, and those things should be fostered. However, many students (especially younger ones), go on to other areas of music where reading will be required. For instance, many students switch to (or add) another instrument. Others may eventually pursue composition or arranging. If you have taught them the fundamentals of reading standard notation, you have given them a priceless head start. If you have not, their time as a guitarist may have largely been wasted. Imagine what your student's next teacher will think about that youngster's musical knowledge.
  
  Regardless of what else does or does not happen within your lessons, if you instill proper playing technique and teach students to read, (and you write weekly assignments reflecting as much), you're largely beyond reproach concerning the lesson content.

3. Introduce various styles, artists, and composers. Mostly for the younger kids, but applicable to all: Students ought to be familiar with the major works in various styles. Personally, I'm not a classical player, but I'd be disappointed if a student of mine didn't recognize the melody of "Ode To Joy" or "Minuet in G". I believe that folk songs and children's songs should be in the repertoire of practically all guitarist students. Again, for a student not to know something like "This Land Is Your Land" is kind of weak. In time, students should know the important classical melodies, some standards, some jazz, and the various sub-styles of "rock" music. Even non blues or country players can appreciate colorful story telling set to simple forms and "easy" progressions.
Try this: Pick some major musical figures and ask your students if they know any of their music. In my experience, almost none can identify George Gershwin, Duke Ellington, Charlie Parker or B. B. King. Not surprised? How 'bout no Elvis, Beatles, Rolling Stones, Dylan, Hendrix, or Clapton? Keep in mind...I'm really not that big into picking songs for students. I try not to dictate repertoire, or show too much dislike for any style. I encourage students to make their own song selections. (And believe me, I teach plenty of songs that I don't particularly care for.) But some pieces are so historically important or musically iconic that "guitarists" are simply supposed to know them.
In classical music, there is a basic repertoire that guitarists are expected to know. By extension, the same can largely be said for many other styles. For each style of music you can think of, you can probably think of a few definitive, representative songs. Unless you're a specialist at teaching a particular style, figure out what you feel are the major works and major artists in various genres...even genres you don't necessarily favor...and include them as part of your curriculum.

4. Remember that lessons should have some value besides learning to play the guitar. Like it or not, if you teach a lot of beginners, many of your students will ultimately discontinue playing the guitar. They just plain quit. Not coincidentally, some of those will be among the ones you remember as "not such great students". I think these students should still come away from the experience with something positive. And for students who dedicate themselves, there is more to being a musician than just playing the guitar. All students should gain something from their lessons. Try teaching critical listening skills, so students can understand and analyze music with a more discerning ear. Students should learn good study skills, and become efficient learners by observing your approach to creating practice assignments. They might learn a little history. You might recommend some books. (Books to read, not music books.) Talk about teamwork, co-operation, reliability, improvisation, conflict & resolution, form, and style. The tough judgment call that you may face is when and with which students and how much to shift your focus to the non-guitar stuff. Consult with the parents, if you think it will help. See that everyone takes something positive from their experience as a guitar student.

5. Don't feel required to promise that the lessons, or the experience of playing the guitar, will be easy or fun. Learning the guitar is clearly not easy, and whether or not it is "fun" to a particular individual is largely beyond your control. Moreover, motivating a student is not your responsibility. Your job is teach the correct material and proper technique. You should be positive, supportive, and upbeat. But you are not responsible for making a student want to play the guitar. Of course, some folks just naturally seem to inspire better effort than others. Such people are often gifted teachers, coaches, and leaders in various fields. If you possess that sort of personality, great. You may tell potential students that taking lessons with you will be fun. But beware: lessons with an emphasis on fun may yield fewer (or slower) results, or a less earnest attitude from your students...not always, but sometimes. Personally, I'm more in favor of "seriousness of purpose" than "having some fun with the guitar", but that's just me. My point is, it's possible to be a fine guitar instructor without being a great motivator. Focus on the content of your lessons. Let the merits of your curriculum yield their results. Students and their parents must understand that they are not learning the guitar for you. It's for them. Learning to play the guitar is its own reward.

6. Do a periodic "Genius Check". "Genius Check" is what I call any test for an unusually high aptitude or proficiency (i.e. "genius") at a particular skill. Of course I don't necessarily mean "genius" in the literal sense. I mean you should check to see if any student is especially gifted in a specific area. If so, you must create a curriculum that nurtures the student's strength, even if it's not something you would ordinarily emphasize. Meanwhile, you'll have to be especially efficient at presenting your normal curriculum, as addressing the student's atypical skill set will decrease the amount of time you can spend on other areas. You may even have to forego some things that would normally be required, in the interest of developing an individual student's full potential. An instructor's ability to navigate these sorts of diagnoses and judgment calls, and assign appropriate practice material, is the sort of criteria that separates mediocre teachers from really good ones.
At the earliest appropriate time in a student's development (and periodically thereafter, as the following skills may not be apparent at first, but may suddenly present themselves), check for:

• Perfect pitch
  • I've had some students whose previous teacher(s) didn't realize they had perfect pitch.
• A good ear without perfect pitch
  • I've had some students with an uncanny ability to recognize and identify intervals, chord qualities, melodies, or harmonic (chord) progressions.
• Singing ability
  • Some folks are just naturally fine singers, but they may be shy about trying it out. I'm a big believer in encouraging guitar students to sing...at least until it's determined that they're definitely not particularly good singers.
• Rhythmic ability
  • Some students are naturally good strummers. Once they learn proper technique, they may be able to play a particular rhythmic style authentically, or strum especially quickly, or have some other groove-related strength.
• Songwriting skills (ability to conceive strong melodies, chord progressions, and/or lyrics)
  • Especially for younger students: encourage them to create something...write a song. It's almost always a postive leaning experience for the student, regardless of the results. And periodically, someone will prove to be a naturally strong songwritter or lyricist.
• Improvisational skills
  • Once a student knows the requisite scales, etc, introduce improvisation/lead guitar playing. As technical proficiency increases, some students may have a flair for playing well developed, expressive guitar solos.

...add your own! Explore any musical skill you feel is important, and see if it's an area you should emphasize in lessons because of a student's high aptitude for it.

Have you ever noticed that the audition pieces for competitive bands or orchestras are ridiculously tough? The reason is simple: Just imagine you were a judge/adjudicator/selection maker. Given an easy piece, many students might play about equally well. Ask for something really tough, and it's easy to tell who comes closest to managing it, and the selection process becomes much clearer. The audition process is a sort of genius check.

How about placement tests at music schools? Often, the first thing an incoming student has to do is take a placement exam, to determine the correct level of classes. These exams start off with reasonable questions, but progress to extremely advanced musical concepts. If an exceptionally gifted music theorist, arranger, or composer lands in an institution of higher learning, they want to know about it. This is a literal example of the genius test.

Don't let a student's strongest skills go undetected!