How do I turn my tiny bedroom into a studio/guest bedroom??

You can do a ton with any vertical wall space that you have. Pegboard is awesome for holding supplies and super easy to install. I made a craft corner in my office and was able to empty a whole closet and desk worth of stuff. You can check it out here - https://www.justmeasuringup.com/craft-room-makeover/. For counter space, you could use tables or build tables. If you're still using the space for a bedroom too, you could make a folding table. Hope this helps :)

I had similar dimensions. At first it was a nursery, then an office.

I put floor to ceiling shelves in the closet which was more narrow than yours, maybe 3 feet wide. I chose to remove the door and decorate the inside, but you could leave it. You would be amazed how much you can put in there.

Is there a space between the closet and the wall about a foot? I had a space like that and put shelves and drawers. The crib and later love seat (in your case a daybed or loveseat sleeper could work), I put on the longer wall.

Maybe you could possibly consider installing a murphy bed, which would fold up into the wall when it isn't used. Or maybe you could get a hide a bed that function as a couch as well. As Eileen mentioned, pegboard is another great way to use your walls to organize supplies.

I would get a trundle bed but under it store a foldable craft table or desk instead of a bed

How do I put this nicely? Hmmm. Well...when I was a boy, the entire family on my Mom's side, thought that my parents operated a free Bed and Breakfast.

Of course, this gets tiring when this occurs each 3 weeks, and is not for an intent to visit the homeowners but instead: Visit others and conduct business in the area.

For I to deter this, I made an Ugly Green Room and use it as a spare closet with 2 windows.

You, to deter this, may not need to go to same lengths as I did.

Your best bet is seemingly already there, as is, to have a cot in a closet, that:

they can sleep in the closet on a cot

Or

they can find a nearby hotel with more legroom.

It may seem unkind.

It may seem cruel.

But, hey, a person can only tolerate so much, and the room is a perfect size for a young grandchild, you do actually want as a guest now and then.

You may want to consider one of those one way closet locks, however, so you can more easily 'accidentally' lock any self-invited in laws inside this 'children's room' in the morning, while you go for groceries and to the bank.

Mostly any small futon bed or daybed will do.

[Especially for the In laws, 'any' means: you can haul it in fresh from the dump and febreeze it after hours].

Thus the best bet for reorganizing a room this size is to look up Dorm Furniture and Dorm Room Layouts.

One of those layouts will please you, rest assured.

I have to say you were definately the comic relief of the responses. I agree that there are some individuals who will abuse the kindness of others, but I do not have a problem with saying, "maybe we could do something, we're are you staying?," "I'm sorry we don't have room." The exceptions would be my mother and sister whom I actually like to have visit. Maybe in 10 to 20 years I will have a grandchildren, the I could take your last suggestion.

You're welcome. Please let us know what you decided to do, when you are done.

I would be happy to. My estimate is that it will be a month or so before I'm finished with thus room.