What is a Cottage Company?
Isn't that just slang for small business?
A cottage company is definitely a small business!
However, a small business is not necessarily a cottage company.
This is a slight, but significant, difference in categorization and cottage company would be a more specific term.
No disrespect meant to other small businesses, but I want to spend a little time defining the terms for consumers.
Let me explain. . .
The term “small business” refers to the number of people on staff at that business and the business’ annual revenue as well.
It does not factor manufacturing, warehousing, order-fulfillment, distribution, etc.
You can see how the U.S. Small Business Administration defines a small business on this chart
A cottage company is, more specifically, a low investment-cost small-business that does their own manufacturing, order fulfillment, and virtually everything else in one place, often out of their own home or garage.
This is the least number of steps from manufacturing to consumer.
For us, it was a closet; Thrupack™ started in a literal closet.
A key difference here is that a small business often sells mass-produced items that are purchased in large quantities from a wholesaler/manufacturer, whereas a cottage company sells original products, made on-site, that are either bespoke or made in small batches: a manufacturer which sells their goods directly to consumers.
A cottage company can even be a manufacturer/wholesaler for another business and remain a cottage company because of these terms.
Cottage companies are very popular in the outdoor industry and amplify their voices in digital marketplaces in order to broaden their market reach.
Other examples of cottage companies would be people selling handmade goods at farmer’s markets, flea markets, and craft festivals.
In the 21st century, most of these businesses have an online presence and most of their websites look really good!
So, it is not always immediately apparent how large the business is or where the manufacturing is done.
When you see the term “cottage company” you know that a much larger portion of your purchase is going to the laborers at the company you are supporting.
When you see the term, it should mean that you are purchasing from a fellow enthusiast with lots of experience in that activity, not just in marketing!
What does this mean for you? Why am I telling you this?
Well, as a consumer it means that when you see “cottage company” you should be able to ask for small product-modifications, within reason.
It means that when you contact the company, you are talking to somebody with the best understanding of the product you are interested in.
Cottage Company = “We made this ourselves!”