I have a 5-600 square foot shop, which is equivalent to a generously sized single car garage. There's room for one project car and that's it. I wish I had a couple thousand square feet, but I suppose if I did it'd be stacked to the gunnels with projects. The size I have to work with keeps me from spinning out of control. I'm retired and spend 20-30 hours a week in my shop.
Over the years the biggest problem is tools and equipment that don't 'earn their keep'. That is, they take up valuable floorspace but don't get used that often or they were put there by some other family member because they thought it was a convenient storage place.
Examples of things that 'didn't earn their keep' in my shop - parts washer, refrigerator, old oven, microwave, freezer, kitchen cabinets (more on that later), MIG welder (I TIG 99%), OA welder, wood planer, Kalamazoo horizontal band saw, table saw. Things that did earn their keep - all on castors- 60 gallon vertical compressor, TIG, belt sander, vice, 56" HF tool box, portaband on a SWAG stand, bead blast cabinet, bench that can be raised or lowered so you can sit or stand and work there -
Here would be my suggestions how to optimize your space-
* Put everything on casters so you can reconfigure the shop easily to fit your project
* Anything that you don't use regularly needs to be stored somewhere else. Spare parts, ramps, jack-stands, automotive chemicals, paint, metal/wood stock can all be stored somewhere else. Buy a yard shed if you have too. I bought about 20 of those hard plastic totes they use to stock inventory at drugstores and made a rack for them. I store all my wiring, drywall tools, painting supplies, plumbing supplies, rope, straps, hardware, small steel stock, etc in those boxes and drag them into the shop when I need them.
* Keep other family members from using your workspace as their storage area. In the past I've had to put my foot down about boxes from kids that left for college, bicycles, an iguana (always trying to bite my toes when wearing flip-flops and **** all over the floor), freezer and a refrigerator, dogs my wife didn't want in the house, to name just a few.
* Keep stuff off the walls, especially cabinets. For a few years I had a 20' wall of kitchen cabinets, both upper and lower with a stainless work surface. A few years ago I tore them all out and replaced them with two HG 56" tool boxes and horse stall mat rubber work surfaces on top. Much more flexible and nearly the same counter space and the metal tool boxes are much more robust than wood drawers
* Epoxy the floor in a solid light color - no flakes/speckles. You'll be amazed on how much your illumination improves and you can sit on the floor without getting dirty. Cleanup is easy. Fill in the expansion joints with flexible epoxy so all your stuff on castors can go everywhere.
* Install good lighting. I have a combination of LED cans and halogen spot lights on tracks that I can aim at a work surface
* Adding heating and cooling to my workspace easily doubled it's utility. I can now work there year around.
* Install a ceiling fan and keep portable fans from taking up floor space - but be careful, I've poked pieces on long stock into mine several times and now it is a little wobley.
* I like to listen to music or have the TV on in the background while I work. I bought a 52" 'smart' TV and a remote keyboard so I could access the internet in the shop. I've used it many times to look up how to do something in the middle of a project. I have a Googlecast device hooked up to to an old stereo receiver so I can listen to podcasts or Spotify while I work, plus it lets me know if the phone is ringing through the speakers.
* I have a toilet and a stainless sink in the workshop. They both 'earn their keep' by keeping me out of hot water with my wife for tromping in and out of the house to pee or wash my hands. (I clean the toilet once a year, whether it needs it or not! It's nice to have a little refuge to sit and read a magazine uninterupted)
* I keep a smoke detector, a carbon monoxide detector and a few fire extinguishers handy. My next upgrade is probably going to be some security cameras. I'd like to know what's going on out there when I'm not there.
That's what's worked for me but YMMV
This is my main workbench in the shop- a little messy with a project in process. It can be used either standing up or sitting down by raising it or lowering it with jack screws. It's on casters and the pegboard moves with the bench top. I keep tools on the pegboard that I frequently use so I mostly don't have to get out of my chair to get something when I'm working. Ditto for the two drawers - pencils, rulers, razor blades - all small stuff I'm likely to need working there. The monitor didn't 'earn its keep' and it and the old laptop that drove it were replaced with a smart TV and a wireless keyboard (which I can watch from my seat at the bench) That MIG to the right is next on my list. Stereo is under the bench and accessed with a remote control, keyboard/remotes on a sliding tray underneath the bench too. Cheap speakers my kids left, and a Polk 12" subwoofer - also under the bench - but still room for your legs
This the last project to come out of my 'small workshop'-
This is what's in the shop now - my wife thinks she wants one of these. Note the chop saw sitting on the floor - was using it in the shop to make a crate for shipping, but now it is going back to its storage location in the shed. All the floor expansion joints are filled to roll everything around without catching.
Gotta go to work - that MG isn't going to paint itself and Mike Patey has a new video on 'Scrappy' up on YouTube