Before you can reach your destination, you need to know where you are going. Here is an example list that you can use as a guide when creating very small distributions:
Determine how much space you need (e.g. a kernel that is 1 Mbyte or less and a root filesystem that is 3 Mbytes or less).
Find the areas that are currently taking 90% of the space and concentrate on reducing those areas.
Do not create any difficult "hacks" to achieve your goals.
Leverage the device-specific options.
Work in a separate layer so that you keep changes isolated. For information on how to create layers, see the "Understanding and Creating Layers" section.