It's Not About Size
There is no rule of how big a half-bathroom should be, but generally, it is 50 square feet (total room size, not just walkable floor space). More often, it is just big enough to be able to walk from the toilet to the sink: about 16 square feet.
A full-service bathroom has as many as 4 services: Toilet, sink, and one or two bathing facilities (shower, bathtub, shower/tub combo, or shower and tub). Thus, a half-bath has half as many of these services. Some people call it a powder room or guest bathroom, but as long as it has no bathing services, it is a half-bathroom.
Half-bathrooms are a blessing in disguise. Because there are no bathing facilities to deal with, your remodel job is cut in half: no shower, no bathtub, no extensive counters, and the floor space is postage-stamp-sized.
Remodeling your half-bath will not impact your life as much because you are not decommissioning any bathing facilities. This allows you more freedom of time to finish the work; however, this also means that guests will have to use your main bathroom while the half-bath is being remodeled.
Half bathrooms are small, but this allows you to hone your bathroom design skills before proceeding to bigger remodeling jobs, like the master bathroom.
If you can help it at all, do not position the half-bath in the center of the house. Instead, make sure that one of its walls is an exterior wall of the house.
There are good reasons for this: First, any window-less room feels oppressive. Second, it is not a great idea to position a bathroom within a larger living area where people are cooking, reading, watching TV, and so on. If you cannot move the half-bathroom to the house perimeter, you will learn to live with it; it's just not the preferred arrangement.
A high-velocity fan is necessary for the half-bath because this room tends to be situated near living areas. Building code states that, as long as you have a 3-square-feet window to the outside, you do not need a fan. That window only needs to be half-openable. Even if your half-bath meets these code requirements, you should install a quality, high-velocity fan in your half-bathroom.
Use larger tiles
Large tiles in small bathrooms actually make them seem larger.
Some feng shui experts say that positioning the toilet so that it is facing the doorway is a bad idea. Feng shui or not, this tends to be solid design advice.
Avoid Large Sink Vanities
Pedestal sinks are one great way to maximize space in a small room. Cabinet-style sink bases not only take up floor space but feel ponderous. You really don't need to store anything in the half-bath, anyway—store cleansers in another bathroom or in a laundry room cabinet.
Keep Decor Simple
Over-adorning your half-bath only leads to clutter. Aside from the toilet and pedestal sink, keep other items to a minimum.
Maintain a majority of neutral-color surfaces (flooring, walls, etc.), but that doesn't mean you can't have a bright accent wall. Dark colors are imposing and make your bathroom feel smaller.
Change What You Can
Rearranging the floor layout is likely not an option. This is such a small space that you cannot move things around much, so you'll be working with what you already have.