Self‐help groups (SHGs) are formed to work for increased income through collective effort and use of banking facilities by initiating some income‐generating activities taking advantage of the financial strength of a group. Taking into consideration the significance of SHGs to economic growth, the present study analyzes and compares the management of the income‐generating activities of SHGs in rural and urban areas. It also explores the extent of resource mobilization through various income‐generating activities, and the constraints faced by the SHGs while undertaking these activities. It is an exploratory research in which a multi‐stage stratified cluster random sampling technique was used for the selection of SHGs. Data were collected at group level and member level through purposely developed interview schedules and focused group discussions. The study revealed that, because of various financial and marketing‐related problems occurring while initiating and conducting the activities, very few SHG members actually started new income‐generating activities. Testing of hypotheses indicated that SHGs do not fulfil all the requirements of income‐generating activities carried out by its members. An overall low to medium level of resource mobilization by a majority of the SHGs presented a poor picture of SHGs in generating resources for undertaking entrepreneurial activities.