It's already been eluded to, but be sure the aerial on the radio is at full length, as well as the one on the receiver. You should never cut the wire on the receiver because it's tuned for the frequency range. If you cut it, then you will certainly lose range, and it may cause some of the radio components to overheat from having to work too hard. Before you start checking anything, be sure you have fresh batteries for both the receiver AND transmitter.

They should be fresh. As a last resort, you should find someone that has a different pair of crystals to see if that's the problem (or their is local interference on your particular channel). If none of this works, you've eliminated all the easy-to-fix problems and it's probably going to require a new radio.