Learn what is a cottage industry, a small-scale family business that produces goods and services using low-technology methods. See examples of cottage industries in different countries and regions, and the challenges they face. 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. Cottage industries are small and informal industries established in cottages or dwelling places. They are small-scale units or manufacturing businesses managed by family members from their homes or establishments usually near their homes. A cottage industry is a small-scale manufacturing businesses run by individuals or family members at their homes with minimal capital.