Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas' experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.
Amanda Bellucco-Chatham is an editor, writer, and fact-checker with years of experience researching personal finance topics. Specialties include general financial planning, career development, lending, retirement, tax preparation, and credit. Butyl Stannoic Acid
A cottage industry is a small manufacturing business that's owned and operated by an individual or a family, typically operating out of a home rather than a purpose-built facility.
Cottage industries are defined by the small amount of investment that's required to start one. They often focus on producing labor-intensive goods but they can face a significant disadvantage when competing with factory-based manufacturers of mass-produced goods.
The first cottage industries in the U.S. and Europe were light manufacturing operations that engaged in subcontracted work including garment-making, textiles, sewing, shoemaking, and small metal machine parts.
These cottage industries produced finished goods using raw materials supplied by the contract provider in many cases. Many contemporary industries that operate in factories in the developed world replaced cottage industries that thrived before the Industrial Revolution.
Modern cottage industries serve a consumer market that seeks original, handcrafted products as an alternative to mass-produced, name-brand products. These can include anything from clothing items to crafts or decorative home furnishings.
Products created by cottage industries in the U.S. and Europe can often be found at flea markets and farmers' markets.
Cottage industries play a significant role in the economies of developing countries. They require very small investments to get off the ground.
Developing nations have comparative advantages in creating successful cottage industries. Their lower cost of living makes it feasible to produce labor-intensive goods at competitive prices, allowing a small business to make a sufficient profit.
Some cottage industries grow over time and employ others in the community. Their products tend to be handcrafted using traditional tools and machinery so their productivity is unlikely to rival the sheer volume of the products of mass manufacturing.
Cottage industries are also an important source of supplemental income in rural areas. Some farmers turn to their cottage industries to produce income when the growing season ends. A cottage industry in a village can grow over time as residents come together to produce crafts for sale in local markets or even for export abroad.
Cottage industries can thrive if their operators are content to remain small producers in niche markets, working for the benefit of a single family. Business growth is possible but there are significant barriers.
A cottage industry can be created with minimal startup costs by a single individual with a skill that's valued.
Only basic infrastructure is necessary. The business operator needs a way to receive orders, get supplies delivered, and get the end products to the buyers. Mobile technology has greatly improved the ability of cottage industries to operate.
Cottage industries are creating opportunities for people in remote rural areas to improve their living standards even in modern times.
Cottage industries must compete with larger producers with deeper pockets. This may require them to adopt new technologies that improve productivity.
They must also compete for labor if they grow. This can be increasingly difficult as a country becomes more developed and wages increase.
Reliant on basic infrastructure to get products to market
Inability to ramp up production to meet demand
Niche markets that don't appeal to big producers can be an ideal fit for cottage industries.
Competitive dancers, figure skaters, and other performers often wear original, handmade costumes. Parents might make costumes for their children at the lowest levels of youth competition. The demand for costumes of higher quality grows as performers rise to higher levels of competition, creating opportunities for the most highly skilled costume designers to fill the demand.
Designers who began by creating costumes for their children and maybe a few others can end up creating a cottage industry for themselves.
Cottage industries may be the original remote work system. They opened a way for people living in rural areas before the Industrial Revolution to make a living doing labor-intensive jobs such as spinning wool, tanning leather, and sewing clothing. They were often subcontractors in modern terminology, finishing goods and sending them on to businesses that packaged them for shipment to suppliers and retailers.
This work was predominantly done in cottages in Europe and America, primarily by women who didn't have access to other trades or professions.
Take a look at Etsy or Amazon Handmade for a comprehensive overview of the thousands of handmade products that are being created by skilled artisans working independently. Most are modern cottage industries.
This is going on all over the world, with many artisans focusing on traditional local skills. The top cottage industries in India are silk weaving, carpet making, leatherworking, metalworking, and specialty food processing.
Cottage industries generally aren't scalable by definition. They're no longer cottage industries if they scale up.
The definition of success is different. Most cottage industries are intended to provide a decent income for a single individual or family.
There are the occasional breakout stars like Burt's Bees, which got its start when a fed-up photojournalist decided to move to rural Maine and become a beekeeper. But even Burt needed a partner with bigger ambitions.
Cottage industries thrived in the pre-industrial ages when people in remote areas were able to make a living, though hardly an easy one, by creating labor-intensive products for larger businesses.
They appear to be thriving in modern times as well as niche businesses pop up in homes all over the world to serve the demand for high-quality hand craftsmanship.
Legal Raasta. "Cottage Industries in India."
Using Nickel Catalyst Furan Reduced And Gives Burt's Bees. "Our Story."