How do you encourage students to prepare for the lesson before class?

Tell them that you will start the next lesson with a "small" test to determine what knowledge of that subject they have. In effect you are offering them a "challenge", but not in the confrontational sense!

Offer them a challenge that can be done or solved by the following lesson.It may be a simple task.If it were a story  or a novel , i may ask them to give the summary of one paragraph or two in10 points or ask them to ask5 to10 questions where the answer is clear in the paragraphs of the novel

There may be many possibilities, but one way is to let the students discuss the importance of the lesson before they learn it. This should stimulate students to expect what they are likely to learn. While time can be limited, it could even serve well with students given a task to think over or discuss at their own time after class. This should prepare them for the next class. This will also encourage interactivity! The basic idea is to let student advance their knowledge on the very things they had lilltle knowledge of.