A cottage industry is best defined as a small‑scale business in which goods are produced by individuals or families in their homes or small workshops, rather than in large factories.

Core idea

  • It involves home-based or village-based production, often using simple tools and traditional methods.
  • Work is usually done by family members or a small group, not a large hired workforce.
  • Output is limited and often aimed at local or niche markets, not mass production.

Historical context

  • Historically, the term referred to the “putting‑out system,” where merchants supplied raw materials to rural households, which then made finished goods in their cottages.
  • Before large factories, many textiles and crafts were produced this way, making cottage industries an early form of manufacturing.

Modern sense

  • Today, it also covers home‑run or side businesses making handmade or specialty products, such as crafts, food items, or artisanal goods.
  • Online platforms have expanded cottage industries by letting small producers sell directly to consumers worldwide while still operating from home.