It is an uphill battle with SEO for sure. It's quite important, though, and your photos and product and pricing seem pretty decent; what stands out to me about your shop is the SEO. The best simple advice I have about it is:
avoid one word tags if you can (use phrases people search instead of single words, because as long as a single word is included in a phrase it counts as if it were on its own as well)
do research: start typing phrases into etsy's search bar and use some of the related ones they suggest, and try google's keyword tool (you might have to sign up for an account) to see what people looking for your types of items are searching.
With this listing for instance:
http://www.etsy.com/listing/152574068/rustic-wood-sign-distressed-with-a-blue?ref=shop_home_activeI don't know what people *do* search to find items like that, but I know they don't just search "small" or "blue" or "handmade"
I mean, if I type "small" into the search bar, would I even be looking for your item? Why would I ever type "small" into the search bar anyway? Do people looking for wood wall hangings typically also search just the word "small"?
That's the kind of thing you have to go through and do with every listing. It's a lot of work, but with my shop Etsy's Search drives probably 60-70% of traffic, and thus 60-70% of sales. So it's worth it.