Improve performance for an underpowered Minecraft server

I have a desktop machine (Windows 7) on my home network that I use mostly as a file server. I set up a vanilla Minecraft server (1.8.8) on it for me and my kids to play on. I have some other friends with kids who like to play, so I opened a port in my firewall so they can access it from the Internet.
I'm getting some complaints, though, of laggy performance. I don't really see it that much, of course, because the machine is 15 feet away from me, but I'm hearing that people are having trouble opening chests when it's raining, for instance.
There's nothing I can do about my upstream performance (I'm not a fan of Comcast) nor am I willing or able to change hardware.
Are there any settings for Minecraft Server that I can adjust or dial back that would help reduce this lagginess? At the moment I have everything set to the defaults for Minecraft server.
How about in the world itself? It's a survival world, but I put myself in creative mode once in a while to build interesting things for people to find, or spawn mobs to make things more interesting. Would "too many mobs" in the area be a problem? How many is "too many"? What else could be an issue?
I would prefer not to have to start over with a new world, since some people have put a fair amount of effort into what they've built so far.
Best Answer
Honestly I am not sure there is much we can help with. if you can load a number of people locally and see no issues but have the same number of people remotely and there is an issue then its clearly the network would appear to be the blame because the server doesn't care where the people are from for performance. It gets/sends the data over the network to wherever.
Secondly though, we more need to know your computer specs and performance and such. Look at your CPU and RAM usage when the system is running just fine as well as when it is reporetedly running slow and see if there is a noticeable difference. If your CPU is peaked and you are seeing Can't Keep Up messages in the server logs then the CPU is too weak to support things. This is where you will normally start to see block lag show up and often happens more so when terrain is generating (people are wandering) than if they are staying in one place. If your RAM is peaked then it means the people are loading too much and you may be getting into disk swapping which is way to slow to be good for a minecraft server. This could also give you the cant keep up messages due to that and give you some block lag (which if you don't know is mining a block and it taking a while to break or opening chests/doors and it taking a while to respond).
The Rain issue is client side however, that implies its their systems that can not handle what is going on well. Have them turn down/off their particle settings.
With out more information I really can not offer more suggestions or things to help tracking down.
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How do I increase my minecraft server performance?
All you have to do is install the plugin and run the following commands: /chunky radius 5000 followed by /chunky start . This will pre-generate a 5,000 block radius around your world spawn. The server will lag heavily while the process is running, but once it is done your performance will improve dramatically.How much RAM do you need for a good Minecraft server?
We recommend at least 3GB of RAM for any modded server. Modded servers are very resource-intensive and use large amounts of RAM. If you plan on installing many mods or large modpacks, you may need to add even more RAM to your server to prevent lag.Does faster RAM help Minecraft servers?
But the bigger and more beautiful your "Minecraft" world is, the more RAM it needs to run. And if not enough RAM is allocated to the game, it'll load slowly, frames will stutter, and it might even crash.How much RAM and CPU do I need for minecraft server?
ConsoleRequirementsPlayersRAMMinimum1-5512 MBAcceptable5-101 GBRecommended10-153 GBGood15-205 GB1 more rowHow To Stop Lag on A Minecraft Server (Increase Minecraft Server Performance!)
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