Choose good musicians. Avoid the common mistake of grabbing the first people you can and take time to invite players after you've had a chance to hear them. Be sure that you enjoy their playing and think their artistic style matches yours. Spend a little time getting to know potential musicians as people, as well, and make sure you're a good fit to have a productive working relationship in terms of compatible personalities, musical goals, and intentions.
Have high standards for the music you play. Don't be afraid to play covers, as this is often a profitable venture as well a good way to be guaranteed of playing good music and challenging yourself. When creating original music for your group, don't play something sub-par just because it's the best thing you can come up with; if no one in your group truly considers themselves a songwriter, find someone outside the group to write songs for you.
Rehearse efficiently. Come to every rehearsal with a plan for what songs you will rehearse that night and what issues you want to address. Encourage everyone in the group to participate in rehearsal planning in order to benefit from the various technical priorities different members will have and the different issues your members will hear and notice. Record yourself on a regular basis and listen back to the recording as a band.
Be picky about your playing. Never let any aspect of the music be "good enough." If you hear anything that could be better, improve it. Always consider your playing to be a work in progress and pay attention to increasing your skills in the basic technical areas of intonation, tone, balance (of volume), rhythmic tightness (playing together and keeping consistent tempos), and creating an exciting interpretation.
Get good sound equipment. Even a great band won't sound good unless the electronic equipment and instruments are of good quality. If you can't afford good equipment, consider renting some just for performances. Pay attention to the condition of not only the speakers, amps and microphones, but also the smaller components, especially chords. Chords are cheap to replace and old, worn chords can destroy the quality of your sound.