O'Neill has already lost retired skipper Martin Laursen and midfielder Gareth Barry following his £12 million move to Manchester City.
Villa finished sixth in the Premier League last season despite having one of the smallest squads in the division.
But O'Neill is aware of the threat which will be posed by Manchester City and Tottenham during the next campaign.
O'Neill, in an exclusive interview with Aston Villa TV, said: "We're on the lookout. We want to strengthen the side. We have lost Gareth (Barry) but we are hoping to be in a position to replace him.
"Having looked at the market and watched what has developed with the major transfers - Kaka and Ronaldo particularly - you can definitely say it's interesting times.
"We are going to have to try and improve - even to stand still in this league. Manchester City and Tottenham will be looking to improve and I envisage Everton being strong again."
O'Neill wanted to keep hold of Barry but believes the England player will go "from strength to strength" after ending his 12-year association with Villa.
The Villa manager said: "It would have been fantastic if Gareth had stayed. It happened early in the summer so we didn't have the debacle we faced the previous season. But that wasn't too important to me.
"It would just have been great if he had stayed on another year. I was disappointed to lose him.
"He wanted to go and he felt Manchester City was the right stage so I won't argue, particularly when you consider the number of years he spent at the football club.
"It has happened now but he has been a fantastic servant and I wish him all the very best.
"I worked with him for three years, he hardly missed a game and he cemented his place in the national side and has done exceptionally well overall.
"I am sure he will go from strength to strength."