A cottage industry is a type of small-scale manufacturing business characterized by its modest size and operation from a home, typically owned and managed by an individual or a family. Discover what cottage industries are, their economic significance in developing countries, and examples of how they thrive with minimal investment in rural areas. A cottage industry is a small-scale manufacturing businesses run by individuals or family members at their homes with minimal capital. A cottage industry refers to a system of production where goods and services are produced at home in small amounts. Learn more about the cottage industry.