Small living room furniture helps you solve problems. You probably can't change the square footage of your space but you can change how you use the room. If you don't have enough square footage your space can feel cramped. Instead, scale down furniture items and really assess your needs to work with the space so you have.
Go for a matching living room set. Of course you don't even have to have two pieces. It might be more practical to just go with one or two chairs and a loveseat. Sectionals will be too large for most rooms, although you might be able to have one custom made. If this if this is the case then try and find a plan where you can build the sofa around the perimeter of the room so you can maximize your floor space in the middle. You don't want a choppy look in a small room. This means that you should really have fabrics that coordinate or even completely match each other. It might even help to have the fabric of the furniture close to your wall color so there isn't a lot of competition in the room. There's already enough stress coming from having a small space you don't need your colors fighting as well.
Look for furniture that has clean lines to it. This furniture is most often found in a contemporary or modern design style. This doesn't mean that you have to have this as the underlying theme of your room if that's not really your style. Just make sure that your furniture doesn't jut out into the space any more than it absolutely needs to. Furniture with a low profile will take up less room, but it can be just as comfortable.
Find storage solution if you have a small living room. You'll probably the dealing with small bedrooms, small bathrooms, and a small kitchen. You might not even have a home office space available to you. This may need to have multifunctional living room that would be cluttered even if it was much larger. You can customize an armoire to instantly turn into a sewing space, office, or a guestroom. This will of course take a lot of decluttering. However, you can always use your garage sale earnings from decluttering towards a new furniture piece such as an armoire.
It seems like whenever you go with a custom made piece of furniture you spend a lot more. Even if you don't go with custom furniture you'll still probably have to deal with higher prices for furniture that's made especially for small spaces. Instead go on the hunt to find your own items that will still work in your room. You could scale down the traditional end tables by going with much smaller plant stands, or just put floating shelves on the wall at the exact height you need it to hold just a glass or two. You want to maximize your wall space as much as possible; just make sure that your storage doesn't end up making the room feel more closed in.