[tjhands]

Your groups aren't bad, let's start with that. Also, I don't think you mentioned if these shots were rapidfire or slowfire. If they were rapidfire, you are doing well.
I have only been shooting handguns for a year and a half now. My range is a 50foot range (17 yards). At first, I'd say that my slowfire groups looked like yours. I wanted to improve, so I took the advice that you'll hear SO many times on this forum: to dry-fire drills at home where you triple check your gun to make 125% sure that it isn't loaded, put a paper plate with an "X" drawn on it on the wall, and stand back 20 feet or whatever you are comfortable with. Then take slow, steady aim, and sloooooowly sqeeze the trigger, watching the front sight the entire time. DO NOT focus on the target!! The target should be a blur in the background, while your full attention is on the front sight. After the gun goes "click," make sure there is no movement of the barrel or the front sight. Do this drill for 20 or 30 slow, deliberate shots every night or two and you will see your groups improve at the range.

My regular range closed for awhile, so I had to go out to a different one, where the minimum distance is 25 yards (75 feet). I was intimidated by the distance, but after using the same tactics at the range as I do at home when I am dry-firing, I found that it wasn't that bad at all.
Like the guy said above, start with a 6x8 inch index card with an "X" drawn on in a thick magic marker and shoot at that. Then move down to 3x5 index cards.
Now that I'm back at my indoor range (the 50 foot one), I can put 14 out of 15 shots close to the center of the 3x5 cards with my Glock 10mm. With my 1911, all shots are dead on, unless I lose my concentration and start looking at the target instead of that front sight. I'm telling you, THAT is the key.

Good luck. Don't ever say, "this is as good as I will get." I started out shooting groups like yours, but have improved so much in the past year. I've found that it doesn't matter how often I actually go out and shoot, but rather how often I practice my dry-firing that makes the difference. Your trips to the range should simply be an affirmation that your dry-fire drills are going smoothly.

One last thing, make sure that you know what is behind the wall you are dry-firing at. I have an empty field back there, so nobody would get hurt in the event that I mess up big time and somehow forget to check my gun first.