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How to start a Cottage Industries Business


Cottage industries is booming thanks to a sluggish corporate economy and the abundance of laid off workers. Instead of heading to the office, many stay-at-home-moms have become work-from-home-moms leveraging their home spun creative ideas for cash.

Understanding the Cottage Business

Specifically defined, a cottage industry business is the creation of products and services that are home-based rather than being manufactured in a factory. When the idea of the cottage industry initially emerged in the late 16th century, most manufacturers produced textile based services such as sewing, lace-making or household manufacturing. Today, cottage industries encompass areas such as baking, crafting and innovating.

The appeal of buying from a cottage industry manufacturer is that the consumer can receive a unique, one-of-a-kind, hand-made product that isn't mass produced. Many consumers also appreciate the human-aspect to home-based created products and services and feel that the majority of these cottage industry services produce a higher quality product than one that is mass produced.

The main attraction a home-based business brings to the creator is the ability to dictate working hours, develop an item or service of interest, and sell the product or service for a higher profit margin. The downside of cottage industry produced goods for both the consumer and manufacturer is a slower production of product and less opportunity to compete with larger brands.

How to Create a Home-Based Business

Before launching a home-based cottage business, entrepreneurs should consider several steps in order to make the new business a success:

  1. Research your industry to evaluate the competition. Review consumer trends, the current market, industry knowledge and future growth. One fast and easy way to access this information is through the Small Business Administration's Office of Economic Research.
  2. Check zoning requirements to ensure you can legally operate your business from home. Some home owner's associations may prohibit owners from operating a day care or a food service business from home.
  3. Incorporate and register your business's name with the city or county clerk. Determine if you will be the sole owner of the company or if you will have a partner.
  4. Apply and obtain a business license from your local government office. Also, determine if you should copy write or patent your work.
  5. Obtain a federal tax I.D. number from the IRS. This is imperative to have at tax time and will be needed, especially if you plan to have paid employees on board.
  6. Develop your business and marketing plan. Areas to consider include creating a website, business cards and establishing a separate business phone line.

Cottage Industries May Be the Next Corporate America

The beginning of corporate America started in the homes, kitchens and garages of everyday, ambitious people. With unemployment still high, Americans are turning inward to examine talents and abilities in an effort to make money. The dawn of Microsoft and Apple were started in garages as a cottage industry. Many others such as Famous Amos and even the creation of the bundt pan were cottage industry related.

Innovative ideas fueled by well researched, determined individuals is the heart and soul of the cottage industry. Additionally, its not just the working class making an impact on the cottage industry. Retirees are leveraging their pension to finance home-based business ideas, adding more life to the cottage industry than ever.


Gina Ragusa is a freelance writer and mom from sunny (and sometimes not) South Florida. Her 15 year experience ranges from writing about banking to tattoo parlors. Read more about her adventures at

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