Make sure to establish a focal point in your living room and arrange your furniture around it. Many people have fireplaces and that becomes the natural focal point of the room. If you don't have a fireplace create your own focal point with a large piece of furniture like an armoire. If is is your family room, you may decide to use your television as the focal point of the room.
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Create conversation areas in your space. People should not have to strain their necks or shout to talk to one another. If you have a very large living room, create several conversation areas.
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Consider traffic flow when you arrange your living room. Leave enough room for people to walk around furniture so they can easily get from one side of the room to the other.
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Move your furniture away from your walls. Having furniture in your room with their back touching the walls is a big mistake. Moving the pieces away from the walls creates a more intimate space. If the back of the piece of furniture is finished off there is no reason not to show it off.