Visit a hundred sites about improving your blog and the one word you will find in common on all of them is content. Content is the start and end of your relationship with your reader. If your content can solve a reader's problems you can be assured they'll bookmark your site for future reference, tell their friends and name their kids after you. Most of that is true except possibly the kids part but I don't know how useful your content is, so I may be wrong.
In order to improve the quality of my content I've got into the habit of separating my writing and editing time. I now write all my posts at once then come back to them a day later, my red pen at the ready. I go back to my content comparing it ruthlessly to what I promised in the title and carving out all the flowery language that doesn't directly answer questions. The biggest enhancement you can make to your blog is take time daily and go back to your old posts and rewrite them. Be vicious and raise your standards; if a post is not being read then you need to re-write it, add more meat, take out what doesn't work, and link to useful resources. Don't just write the same way over and over and pray that for some reason this post will eventually find a readership; keep tweaking. Keep working at your content and find out what's working and why and replicate it. There is no point in writing if no one reads your work. I find I need to constantly tweak my content to find my readers and what they're searching for. My goal is to use the data I have to hook the reader on something they want to find out and then once I have their attention I utilize my layout to keep them on my site.
This leads me to the second enhancement I'd recommend immediately; unclutter your layout. Too many blogs try and be everything to all people. Especially when you're starting out I strongly recommend targeting a niche with your posting and utilizing your layout to create a loyal audience. First thing I'd suggest is optimizing your post pages. If you're using a content management system like Wordpress, find a plug-in that will deliver related content on your side bar. Pay special attention to the information above the fold (information first visible when a page loads); the layout should re-enforce your brand and deliver all your best content. Nine out of ten times I'd recommend keeping some of your hand-picked best posts above the fold and dropping your recent posts a bit lower. The layout of the first page your reader lands on is your only chance to make a first impression. Make sure you have your best writing one click away from him. Archives and calendars are useful but won't get clicked if your content is not compelling and visible. For layout, keep it simple, use images to re-inforce your posts, make sure they are always relevant. Treat your pages like real estate and make sure you maximize the way you use it. Limit the size of your banners and purely decorative elements. Align your layout to your goals, and you'll find you'll maximize the impact of your content and turn visitors into an audience.
On the topic of goals, do you want to earn money? If you do, drop some of your advertisements and do it now. I'd suggest utilizing one or two prime spots for ads and dropping the rest. Focus on increasing your audience; when you start out you need traffic to get clicks. I find it best to target a few hot spots on your site, 2-3 at most, and focus your efforts on those. Readers tend to click on ads based on the copy. A site cluttered with ads makes the copy harder to read as the site can become very busy and the reader is less likely to spot an ad that caters to their needs. Focus is key; keep focusing on what you want your reader to do and you'll find the winning recipe.
If your blog is new change your goals. When you start out, your ultimate goal is readers. Focus on converting readers to subscribers. Focus on improving your subscriber stats. Put your sign-up icons front and centre, make sure that your reader will never leave without subscribing because they didn't know how.