I spent some time at Excel Audio in Newport Beach and auditioned some gear. Some of the best available and it was very impressive.
Your TT/cart is where I started just 4 years ago. It is entry level and not worthy of some of the high quality vinyl you might be buying at Excel (I buy all my vinyl from Mike).
How to get a better system incrementally? You should trust Mike’s advice. Let him know how much you are willing to spend. I would start with TT/Cart/Phono stage.
My issue is that my room is so small it seems to me that I would reach a point of dimminishing returns very quickly.
Near field listening can be awesome - listen to the very small Harbeth’s - I think Mike has all but the 40’s in stock. I used to have Harbeth 30’s in a 60x20 ft space with a couple of small RELs and they were amazing for their size. Not trying to steer you to Harbeth, just that a small (12x12) room should not be limiting your expectations. Actually it may be an advantage.