Cottage industries is a term that was prevalent during the eighteenth and nineteenth centuries that describe the home-based system of manufacturing. Note that this same term is used today to refer to goods or services that are produced at home.

According to reports, rural families were some of the first to become involved in the cottage industry. They added to their agricultural income by making products at home. Merchants provided the raw materials to the families, collected and marketed the finished product, and then paid the family a percentage of the price charged to the end consumer.

Some of the items made by these at-home workers are cloth and clothing, shoes, cigars, and hand-decorated items. Cottage industries developed in cities around 1870, resulting in the harsh tenement housing system. Immigrant families lived and worked in these crowded, unsafe apartment buildings. They were known to work for extremely low wages, usually making garments. This system lasted until around 1920 when better management of factories made home-produced goods less competitive.

Hand-decorating of items, sewing, and other highly specialized activities are still known to operate as cottage industries today. Experts point to the rise of a new type of cottage industry whereby people can stay at home to perform work on their computers that formerly had to be done at the office. Telecommuter is also another term used in this age to refer to home-based employment.

A good number of jobs that used to require workers’ physical presence in the office can now be performed from home. Starting and running a business from home today requires only a couple of phone lines with call forwarding and call waiting, a computer with e-mail and a modem, a fax machine, a copier, and office supplies. For executives on the go, a cell phone and laptop computer can keep them up and running from just about any location.

Also note that some parents find it more productive, more cost-effective, and safer to keep their children with them while they work at home. They can have the flexibility of arranging their job around their family’s needs. Many parents also love being able to spend time with their children during the day.

Note that another reason why people choose to work from home is that they do not have to commute to and from their workplace. By not commuting to work, they can save on wear and tear of their vehicle, get lower insurance rates, and spend less money on gas.

Remember that working from home also saves money that would normally be spent on a workplace wardrobe. Much more informal clothing can be worn when working at home. Not spending money on uniforms, suits, and/or dresses provides more money for other expenses.

Home employment gives one back the ability to control their life. There are freedom and flexibility in setting work schedules. Parents can be home for their children, there are no commuting hassles, and no one looks over their shoulders or determines break time. The individual, not the employer, chooses their work schedule. A parent has the flexibility of scheduling work flow around school activities such as field trips and sports activities.

Top Cottage Industries in the UK

For those people who wish to become self-employed and work out of their home, there are several types of Cottage Industries to consider. They include;

  1. Services

Note that with the commercialization of the internet beginning in the mid-1990s it has become very common to contract services to individuals working out of the home.

Example

This includes customer service that is provided by an individual at home who can connect to a company’s systems using a VPN connection.

  1. Manufacturing

Historically, the cottage industry was a system of subcontracting manufacturing work to families. This was necessary before the industrial revolution as a means to produce textiles, clothing, and furniture, and house wares.

Example

With the invention of the home sewing machine in 1846, home production of bespoke clothing remained a thriving industry well into the 20th century. These industries were popular amongst farming families as a means to make extra money in winter.

  1. Crafts

Owing to the industrial revolution it became increasingly rare to produce manufactured goods out of the home as factories have far greater scale and efficiency. The one area that has held out is crafts whereby items are valued for their uniqueness, handmade qualities, artistic value, or traditional characteristics.

Example

A family that produces handmade Hawaiian quilts that command a premium price due to their uniqueness, traditional workmanship, and authenticity.

  1. Business Model

In venture capital circles, the term cottage industry is used to refer to a business model that is not scalable. Such a business is not worthy of a large investment because it will never produce large revenues. This does not invalidate the business model as it may be a worthy business for an individual that employs a few people.

Example

This involves a software developer with an idea for a niche mobile app with a total addressable market of less than a million users. This may be profitable for the developer but may be unlikely to become the type of billion dollar business that venture capitalists seek.

Most Successful Cottage Industries in the United States

Have it in mind that homepreneurs are likely to offer a service rather than manufacture a product. This is because lower wages and often lower input prices abroad enable foreign producers to offer lower prices for products. In addition, homepreneurs can often provide services locally that are impossible to replicate by remote service providers. Nonetheless, here are the best cottage industries in the United States.

  1. Alternative Healthcare Providers

Healthcare reform restricts health insurance companies from discriminating against licensed alternative healthcare providers, so providers are expected to benefit as more people enjoy coverage for industry services. Alternative health care providers include meditation, yoga or massage therapists. Consolidation is expected because billing and coding for insurance payments is time consuming and costly, so bigger operations are better able to properly perform these functions.

  1. Psychologists, Social Workers and Marriage Counsellors

Notably, two-thirds of American adults and one-third of children who require mental health treatment do not receive it. A reform-mandated increase in insurance coverage for services provided by psychologists is expected to help psychologists address this unmet need and open or expand such businesses.

Have it in mind that private practices can be more lucrative for individual operators, so healthcare changes will provide incentives for new businesses to enter. Smaller operators lack the institutional financial backing will be most likely to seek out loans during the next five years.

  1. Party and Event Planners

Note that as unemployment falls and people are faced with waning free time, demand for professional event and party planning will expand. This will organize the stage for more industry entrants. Business loans will enable party and event planners to hire more employees and purchase more supplies to cater to a higher volume of events.

  1. Performers and Creative Artists

Indeed improved economic conditions may affect performers to seek loans for self-promotion purposes like acting reels or headshots. Effective marketing tactics can help independent artists develop the necessary fan base they need to launch their careers. Improved economic conditions are anticipated to provide more avenues for revenue growth during the next five years.

  1. Personal Waxing and Nail Salons

Drastically reducing unemployment and increased disposable income will let a good number of consumers to afford nail care and waxing services. Nails-only salons will more or less diversify their offerings to include services such as massages, facials, and tanning. Diversification will mitigate revenue volatility because it will expand the industry’s target market, and it increases the probability that operators will seek out loans for expansion.

  1. Psychic Services

Also note that an increase in citywide regulations will more or less be introduced during the next five years, which will result in industry consolidation. This may boost operator interest in small business loans to finance mergers or acquisitions. With lessened price-based competition due to fewer operators, profit margins increased slightly from 7.0 percent of revenue in 2012 to 7.4 percent by 2017.

  1. Maids, Nannies, and Gardeners

Just as the population continues to age, demand for home-care aids will also rise. In addition, the unemployment rate is expected to continue declining, yielding greater per capita income growth and spurring demand for household staff during the next five years.

Moreover, industry employment rose 3.7 percent per year on average from 2012 to 2017. As small businesses in this industry expand, they may need working capital loans to subsidize short-term costs like wages, or purchasing inventory like machinery.

  1. Online Pet Food and Pet Supply Sales

Note that the number of pets is forecast to grow 2.0 percent annually on average during the next five years, which will support revenue growth for homepreneurs offering pet-related services. Loans will be likely used for start-up or expansion costs. This industry’s low barriers to entry and employee skill requirements allow companies to enter the market without much difficulty.

Conclusion

Despite all the benefits, home employment is not for everyone. One should check local authorities before starting a home-based business as towns vary greatly in their local ordinances. They will explain any rules the town has established regarding home-based businesses and give guidance in the necessary paperwork or approval process.

Frequently Asked Questions

  1. What Is A Cottage Industry?

A cottage industry is a small-scale, decentralized manufacturing business which is often operated out of a home or a small facility rather than a purpose-built facility. It is a small scale industry in which the products are manufactured manually by artisans. Basket weaving, pottery, and other handicrafts are examples of the cottage industry.

  1. What Is A Characteristic Of the Cottage Industry?

The characteristics of a cottage industry are;

  • It is organized by individuals with private resources.
  • It normally uses family labor and locally available talent.
  • The equipment used in it are simple.
  1. How Do You Start A Cottage Industry?
  • Conduct your feasibility studies
  • Learn Everything you need to learn about the crafts or products you want to manufacture
  • Choose a name and register the business
  • Draft a detailed Business Plan
  • Secure the needed licenses and permits
  • Apply for an EIN (Employer Identification Number)/Federal Tax ID Number.
  • Open a corporate bank account
  • Lease and equip your lab or production factory
  • Source for your raw materials
  • Hire employees
  • Market and promote your products
  1. Why Start A Cottage Company?

You should start a cottage company because small-scale industries are labor-intensive and provide employment to 80% of the industrial labor force. This reduces unemployment and offers opportunities for self-employment.

  1. The Cons Of Starting A Cottage Industry?
  • Food Laws.
  • Zoning Requirements.
  • Parking and Distribution challenges
  • Health and Safety issues
  1. How Does The Cottage Industry Help In Reducing Unemployment?

Cottage industries not only increase the income of the family but also reduce unemployment by employing more people, and thus raise the standard of living of  members of the family.

  1. What Is A Cottage Industry Bakery?

A cottage industry bakery is a small-scale bakery, usually operated out of someone’s home. These home-based businesses are regulated by “cottage food laws” rather than commercial restaurant and health codes.

  1. What Are Examples Of Cottage Industries?

The top cottage industries are furniture making, leather manufacturing, silk weaving, cotton weaving, small scale food processing like pickles, meticulously done metal handicrafts, and carpet making.

  1. What Are The Advantages Of the Cottage Industry?

By operating the business from home, cottage businesses save money by not having to rent a commercial kitchen, office space, or plant, and the associated utilities and other costs. Cottage industries also are exempt from many of the licensing and registration fees businesses often have to pay.

  1. What Are The Problems Of Cottage Industries?

The following are the main problems faced by cottage or small-scale industries;

  • Lack of Finance
  • Competition
  • The problem of Raw Material
  • Old Methods of Production
  1. What Is An Independent Subsidiary?

An independent subsidiary is a subsidiary that operates independently of the parent company and is a separate legal entity. They do not have to be in related industries. It is, in fact, common for companies to own other firms which operate in entirely unrelated fields as a way of diversifying their operations.

  1. Why Is It Important To Have Cottage And Small Scale Industries?

Small scale industries are important because it helps in increasing employment and economic development of developing countries. It improves the growth of the country by increasing urban and rural growth. Small scale manufacturing industries and cottage industries play a very important role in the economic development of developing countries.

Joy Nwokoro