The Midlands club are challenging for a Uefa Cup place with a squad of just 23 which is one of the smallest in The Premier League.
"We'd definitely be looking to enhance the squad," O'Neill said on the Birmingham Evening Mail website. "We've put in a bed rock but now this club should be looking in that upward direction and keep going in that direction, not stuttering and standing."
The Irishman uses Everton as an example of what can happen when you get the right size of squad.
"Everton had all those games in the Uefa Cup and then they go into the league format. You have to field a side to play in all those games and then you have to come back the following Saturday and play in the league.
"For us as a football club - I'm not saying the team - but as a club we should be able to carry a fairly substantial squad because we are big enough."