Make sure your fabric is an even square and trim down any irregular corners. Fold the square in half, and line up the outer edges. Pin the two layers of edges together with safety pins, leaving 4 to 6 inches between pins. This is to keep stop the fabric from slipping, and to hold it into place as a square. Fold the pinned fabric over again into a quarter, and pin the inner corner again through the four layers. This inner corner should be the exact center of your yard of fabric.
Using the tape measure, make a mark 4" in from the top edge of the inner corner, and another 2" down from the top of the inner corner.
Using the washable fabric marker, draw a curved line freehand from the 4" mark at the top, down to the 2" mark at the side of the folded fabric. This is the outline for the neck opening. Carefully cut along this outline through all four layers of fabric. It will end up making an 8" x 4" long oval opening in the fabric.
Unfold the fabric, and remove all the safety pins from the outer edges of the fabric. If you are working with a more loosely knit material like the one I used, turn the fabric inside out and tack the outer right and left ends of the neck opening with a needle and thread, to prevent any stretching or unraveling of the material.
Wash the your poncho by hand or on a gentle cycle and dry it before wearing, to remove any fabric sizing or lint. Trim off any long excess threads from edges.