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;
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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.
This includes customer service that is provided by an individual at home who can connect to a company’s systems using a VPN connection.
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.
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.
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.
A family that produces handmade Hawaiian quilts that command a premium price due to their uniqueness, traditional workmanship, and authenticity.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.