This study focuses on the contribution of small and cottage industries to employment generation in Bangladesh. The study comprised 164 participants from small and cottage industries, using a cross-sectional design, who were surveyed in the greater Chattogram region. SmartPLS (Version 4) was used to analyze data. A standardized questionnaire with a 5-point Likert scale was applied to collect primary data for this study. Interceptor activity focused on three cottage industry areas. This study finds that entrepreneurial skill development mediates the connection between government policies, incentives, market demand, and infrastructure development, generating employment in small and cottage industries. The main limitations of this study include its geographic restriction to Greater Chattogram, its limited sectoral focus on only three industries without individual analysis, the use of non-probability sampling, and the exclusion of gender-specific data, particularly concerning female entrepreneurs. The study suggests that small and cottage industries can build an affluent and employment-generating economy in Bangladesh. It will showcase that Bangladesh's small and cottage industries are vital employment-generating and job-opportunity sectors of this economy.