A cottage industry is a small manufacturing business that often operates in the home of the craftsperson, who is also usually the company's proprietor. These decentralized manufacturing businesses produce goods and services and sell directly to consumers at local markets or online. 

Cottage industries were the standard manufacturing base in many countries until the Industrial Revolution, which saw a rapid and disruptive conversion to large, centralized, mass-produced goods. Today, cottage industries continue to provide employment opportunities in small communities.
Cottage industries emerged in preindustrial societies because of necessity. Consider these aspects of how cottage industries operate:

- __Home production__: Before the Industrial Revolution, many households used raw materials like wood and fiber to make tools, furniture, and clothing and sold any excess finished products for profit. Those with exceptional skills went on to specialize in crafts, start small workshops, and eventually integrate into decentralized trade networks with other family-run enterprises. 
- __Putting-out system__: In some cases, makers crafted goods in studios with materials merchant employers provided and then sold them to intermediaries. This approach is the putting-out or domestic system.
- __Small-scale business__: Today, craftspeople produce goods at home or in studio spaces with their own equipment using traditional methods. [Small businesses](https://www.masterclass.com/articles/tips-for-starting-a-small-business) that belong to cottage industries typically have few employees, require minimal investment, and do not have the scale necessary for [mass production](https://www.masterclass.com/articles/mass-production).
Cottage industries are a significant part of the economy, particularly in developing countries. Consider the following examples:

1. __Decorative handicrafts__: There is a worldwide market for handmade goods like jewelry, pottery, and wooden [cookware](https://www.masterclass.com/articles/cookware-guide-types-of-pans-and-how-to-use-them).
2. __Musical instruments__: Factories mainly produce [guitars](https://www.masterclass.com/articles/guitar-101-what-is-an-acoustic-guitar-learn-about-acoustic-guitars-and-tips-for-playing-guitar), but a reasonably robust cottage industry of makers (known as luthiers) still designs and builds high-quality guitars and other stringed instruments by hand.
3. __Shoemaking__: This is an artisanal cottage industry around footwear, although large-scale factories produce the majority of [shoes](https://www.masterclass.com/articles/types-of-shoes). You can still find high-end products from cobblers worldwide. 
4. __Textiles__: The textile industry is a classic example of technological change driving a significant economic shift. Innovations like automated weaving machines changed the production of materials for [textile designers](https://www.masterclass.com/articles/how-to-become-a-textile-designer). Still, there are small-scale cottage industries for weaving [fabrics](https://www.masterclass.com/articles/28-types-of-fabrics-and-their-uses), dyeing fabrics, and [sewing](https://www.masterclass.com/articles/how-to-follow-a-sewing-pattern) clothing.
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Cottage industries initially took place inside the cottages or homes of the makers. Learn about the history of cottage industries and how these small businesses operate.

Cottage industries initially took place inside the cottages or homes of the makers. Learn about the history of cottage industries and how these small businesses operate.

Cottage Industry Definition: 4 Examples of Cottage Industries

A cottage industry is a small manufacturing business that often operates in the home of the craftsperson, who is also usually the company&#39;s proprietor. These decentralized manufacturing businesses produce goods and services and sell directly to consumers at local markets or online. Cottage industries were the standard manufacturing base in many countries until the Industrial Revolution, which saw a rapid and disruptive conversion to large, centralized, mass-produced goods. Today, cottage industries continue to provide employment opportunities in small communities.

Cottage Industry Definition

Cottage industries emerged in preindustrial societies because of necessity. Consider these aspects of how cottage industries operate:<ul class="mc-m-4 list-styled"><li class="">Home production: Before the Industrial Revolution, many households used raw materials like wood and fiber to make tools, furniture, and clothing and sold any excess finished products for profit. Those with exceptional skills went on to specialize in crafts, start small workshops, and eventually integrate into decentralized trade networks with other family-run enterprises. </li><li class="">Putting-out system: In some cases, makers crafted goods in studios with materials merchant employers provided and then sold them to intermediaries. This approach is the putting-out or domestic system. </li><li class="">Small-scale business: Today, craftspeople produce goods at home or in studio spaces with their own equipment using traditional methods. <a href='https://www.masterclass.com/articles/tips-for-starting-a-small-business' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/tips-for-starting-a-small-business","linkCopy":"Small businesses","category":null}'>Small businesses</a> that belong to cottage industries typically have few employees, require minimal investment, and do not have the scale necessary for <a href='https://www.masterclass.com/articles/mass-production' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/mass-production","linkCopy":"mass production","category":null}'>mass production</a>. </li></ul>

How a Cottage Industry Works

Cottage industries are a significant part of the economy, particularly in developing countries. Consider the following examples:<ol class="mc-m-4"><li class="mc-my-4"> 1. Decorative handicrafts: There is a worldwide market for handmade goods like jewelry, pottery, and wooden <a href='https://www.masterclass.com/articles/cookware-guide-types-of-pans-and-how-to-use-them' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/cookware-guide-types-of-pans-and-how-to-use-them","linkCopy":"cookware","category":null}'>cookware</a>. </li><li class="mc-my-4"> 2. Musical instruments: Factories mainly produce <a href='https://www.masterclass.com/articles/guitar-101-what-is-an-acoustic-guitar-learn-about-acoustic-guitars-and-tips-for-playing-guitar' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/guitar-101-what-is-an-acoustic-guitar-learn-about-acoustic-guitars-and-tips-for-playing-guitar","linkCopy":"guitars","category":null}'>guitars</a>, but a reasonably robust cottage industry of makers (known as luthiers) still designs and builds high-quality guitars and other stringed instruments by hand. </li><li class="mc-my-4"> 3. Shoemaking: This is an artisanal cottage industry around footwear, although large-scale factories produce the majority of <a href='https://www.masterclass.com/articles/types-of-shoes' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/types-of-shoes","linkCopy":"shoes","category":null}'>shoes</a>. You can still find high-end products from cobblers worldwide. </li><li class="mc-my-4"> 4. Textiles: The textile industry is a classic example of technological change driving a significant economic shift. Innovations like automated weaving machines changed the production of materials for <a href='https://www.masterclass.com/articles/how-to-become-a-textile-designer' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/how-to-become-a-textile-designer","linkCopy":"textile designers","category":null}'>textile designers</a>. Still, there are small-scale cottage industries for weaving <a href='https://www.masterclass.com/articles/28-types-of-fabrics-and-their-uses' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/28-types-of-fabrics-and-their-uses","linkCopy":"fabrics","category":null}'>fabrics</a>, dyeing fabrics, and <a href='https://www.masterclass.com/articles/how-to-follow-a-sewing-pattern' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/how-to-follow-a-sewing-pattern","linkCopy":"sewing","category":null}'>sewing</a> clothing. </li></ol>

4 Examples of Cottage Industries

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Cottage industries initially took place inside the cottages or homes of the makers. Learn about the history of cottage industries and how these small businesses operate.

Cottage industries initially took place inside the cottages or homes of the makers. Learn about the history of cottage industries and how these small businesses operate.


Luthier repairing a violin in his workshop, part of a cottage industry of makers.