Small living room spaces can still be usable. This is a reality in many older homes or in apartments and condos or if you live in a city where real estate is at a premium. You might not be able to find a lot of square footage no matter how much money you have to spend. You might be in a situation where your living room also has to do double duty as a dining room, family room, playroom, sewing room, guest room, and office. This is a lot of functions for a small space, but with a little bit of planning you can get a living room that is completely livable.
Use subtle colors. You know how a lot of people refer to bold colors like red as "in your face?" Well this can be taken literally. You want your room to feel bright and airy to create more of an illusion of space. This means that you should go with either neutral or cool colors so your room will feel larger than it actually is. The focus should be on the floor plan, or at least the illusion of an open floor plan instead of playing with bold colors.
Find furniture that does double duty. If you buy end tables make sure that the bottom and middle are as usable as the top. Look for end tables with shelves or doors on them to double as storage space. If you could add in a window seat that has a lift top it can be used as a toy box with proper safety precautions. The same rule applies to ottomans. You can even find ottomans where the back folds and turns into a small chair so it will give you some extra seating.
Find stylish storage. It's not possible to hide all of the functions and items in one small space. Instead, turn what you can hide into an asset. You could build an entire wall of bookshelves that will serve as the focal point. Then you could place baskets on the shelves to hide away the unsightly items and the focal point will be your beautiful collection of books. You want to use any storage solutions from floor to ceiling to maximize your wall space. Remember that if you can't build out, build up.
Don't use more furniture than you actually need. There is no rule that you have to have a sofa and a love seat in the same room. You might just be able to fit a small loveseat and two arm chairs in a space. Overstuffed furniture takes up more room so go with modern clean lines that will give you a contemporary look.
Your overall design style will determine how a small space functions. You'll want to stay away from cluttered design styles such as country and go for more of a contemporary look which is perfect if you want a lot of light in your space. If you do go with a country design style make sure that you keep your accessories to a minimum so it doesn't overpower the room. Every item in a small living room needs to have a function. This will also save money on your decorating budget because you won't have to buy unnecessary accessories. In these types of rooms it's vital that you go with high end items that are low in scale so that your room still seems rich even if it's small.