So now with some hopeful signs that the economy may be improving, will we see another generation of firms spring up from the ashes? We at KIA certainly believe this will be the case, for the following reasons:

There has been significant market consolidation over the past two years, such as with the merger of HP and EDS, and Towers Perrin and Watson Wyatt, creating holes in the market for new and nimble firms.
Clients are actively seeking alternative suppliers so as to "not to put all their eggs in one basket."
There is a large pool of talented consultants currently on the street hungry for opportunities.
Venture capital firms are slowly beginning to loosen their purse strings again.

Lessons Learned
The last two waves of firms taught some valuable lessons. If you plan to start your own consulting firm, here are a few takeaways from our perspective:

Be in it for the long-term; And make sure your venture capital is in it as well. The days of flipping businesses in three to five years are over. Buyers will be looking under the hood more carefully.
Invest in your firm's infrastructure early; KIA has seen many firms stall when they reach the $20 million revenue mark because leadership could no longer effectively manage the business.
Manage your metrics; It is critical for firms to identify trends in sales cycles, utilization, etc. on a timely basis to take pro-active steps.
Be prepared to be countercyclical; Build when the market is tough, reap benefits when the market is starting to recover, stabilize and harmonize your business model before the market gets hot again.

The Opportunities
KIA sees plenty of opportunity across all consulting segments:

Business Advisory Services: There is demand for high quality/low cost alternatives to the Big Four.
Human Resources: With the fall out over Wall Street inspired C-level compensation packages, many investors are beginning to take a closer look at executive pay, which will drive demand to build new creative compensation structures.
Operations management: Clients will continue to look to become "leaner and meaner." Everything "green" and related to "sustainability" is an underserved consulting domain.
Information Technology: Truly innovative technologies consulting and mobile technologies helping companies virtualizing their workforce will be in high demand. Project management consultancies specializing in managing large scale legacy modernization projects will be in high demand.
Strategy: Players with practical and analytical understanding of particular areas of an industry vertical will be in high demand. T-shaped industry expertise (wide in general, and deep in some specialty area) will enable new entrants to advise on the strategic direction and downstream activities.

Verticals
Healthcare and energy are obvious verticals to focus on right now. Despite the collapse in the financial services industry, it continues to be the largest
commercial sector in terms of spend and should be quite aggressive coming out of the downturn.

KIA Corner: Here's the Moment You've Been Waiting For—Start Your Own Consulting Firm

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