In a woodworking shop, lumber storage is key, and it’s best to design shelves or racks that are about 50 percent larger than you think you need — you’ll almost certainly acquire more materials as the years go on. To maximize a small space, use walls by mounting shelves to the ceiling and purchasing a sturdy step ladder to help you reach things. A wall covered in standard pegboard and outfitted with hooks allows you to customize hand tool storage and keep your most-used hardware within easy reach.
Click the image at right, and start building the ideal workflow at the bottom where you see the first red arrow. This arrow crosses through one roll-up door of a typical two-car garage. Note that if the right-hand window were not present, you could place lumber storage closer to the entrance, which would also allow for easier passage onto the jointer. Work flows from the jointer to the planer and the table saw, then ideally onto an outfeed table near position #2 in the diagram. From #2, proceed left to the assembly area (pictured below).

Shops have value on many different levels. There is the sat­isfaction of having a place to create and work on projects that is hard to quantify, but definitely improves your quality of life. There is the value to your small business of having space in which to work wood and thereby generate income. There is the dollar value of the build itself, which will be a consider­able investment and, finally, there is the resale value of your property after you’ve added your shop. Before you go too far, though, it’s worth asking a local real-estate agent about the potential return on your investment in your area; generally shops won’t add significantly to the value of your property, so it’s worth thinking carefully about what else the space could be used for if you were to sell. The decision about whether it is worth it to build is a matter of balancing all these factors: projected sales balanced against the cost; the cost of build­ing is balanced against what it will be worth when you sell. Woodworking can be a creative outlet, can give you a sense of mastery, and even be a way to give back to your community by donating beautiful pieces to local charities for fundraising auctions, or creating pieces that future gener­ations will inherit. Ultimately, the value of a shop might come down to the emotional and social returns that it will pay you and the people around you for years to come.

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Marc, would not assumptions for a Festool shop differ considerably? Far fewer big machines, and more carrying lightweight precision machines to the wood, for example. I only have a few Festool machines so far (took quite a while to get past the sticker shock), but I am beginning to see how it could change the way we work. My 400 sq ft shop is getting awfully crowded with floor-standing machines and implementing your guidelines, sound as they are, is difficult.
One of the challenges in building a cabinet for hand tools, is that as soon as you define a place for each tool in your custom cabinet, you find that you need more room to store the must have tools you just bought. I decided to make a couple of open cabinets, and employ the use of inserts that can be replaced or modified as my tool collection grows. Part of the goal was to make a clean, efficient shop, while keeping to a budget. I bought paint grade maple plywood and made the cabinets. Applying a solid maple face frame to the cabinet makes a clean looking cabinet from sheet goods purchased at $50/sheet.
When you design your workshop setup, climate control often gets ignored — and that’s a huge mistake! If your workshop or hobby room is in an unconditioned space like a garage or basement, you could find that it’s brutally uncomfortable to work in there during warm weather. You’ll be much happier with a solid fan — or several — to keep air moving for your comfort.
Cutting a miter joint that closes up perfectly and maintains a 90 degree angle is really satisfying. Unfortunately, it doesn’t always happen. Here’s a quick fix for a slightly open miter joint; rub the shank of a screwdriver along the miter at a steep angle, from both sides of the joint. Chances are, you’ll be the only one that knows it wasn’t perfect to begin with! Try this amazing miter project!
An interesting variation of this layout is displayed in Jim Tolpin’s shop, shown in the photo at right. Tolpin located his jointer to the left of his table saw, its height low enough to allow panels cut on the saw to pass over the jointer. To save space, his portable planer lives beneath the saw. All three tools are oriented toward the garage-style door, which can be opened to allow long boards to be ripped, jointed, or thickness planed.