This is a fundamental question. A good place to start is with a survey of your property. Most municipalities have a maximum percentage of your lot that you can build on and standard setbacks from your property lines that you will need to adhere to without needing to request special permission to build. On a photocopy of your survey you can draw in what your local setbacks are in order to define the location within which you will be permitted to build. In a best-case scenario, you will have the space to build without compromising too much on space or location; otherwise, you may need to request a minor variance, which would allow you to circumvent an obstacle such as a setback.
For all of my planning, I must admit there simply was no room in my shop for some tools. I struggled to find a place for my wide jointer and eventually decided against shoehorning it in, instead making a fixture for my router table that joints edges quite well. My scrollsaw, the bulk of my wood supply, and some storage cabinets didn’t make the cut either. These remain in a nearby room.
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First, let’s take a look at four placement options for the table saw, the machine that is at the heart of most woodshops. The first option (see the illustration) places it in the center of the shop, which lends maximum space and flexibility for ripping and panel sawing, as well as crosscutting long boards. The main requirement here is a shop that’s at least long and wide enough to allow room for the workpiece, both on the infeed and outfeed sides.