The cake business is growing fast. According to recent data, the global cake market reached USD 65.68 billion in 2023 and is expected to hit USD 80.42 billion by 2030. This growth shows that demand for custom cakes, celebration desserts, and specialty baked goods keeps rising as more people value quality and personalization.

Starting a cake shop can be exciting and profitable, especially with this market momentum on your side. You need more than just great baking skills, though. You need to handle permits, pricing, equipment, and customer orders.

In this guide, we walk you through every step of opening a cake shop, from creating your business plan to accepting your first online orders. Let’s get into it.

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Key Takeaways

• Create a detailed business plan for a cake shop: Define your niche, target market, startup costs, and revenue goals before investing money.
• Get proper permits and licenses: Research local health department requirements, food handler certifications, and business licenses specific to your area.
• Set up your kitchen with essential equipment: Invest in commercial-grade ovens, mixers, refrigerators, and decorating tools that can handle volume.
• Price cakes based on costs plus profit: Calculate ingredient costs, labor hours, overhead expenses, and desired profit margin for each product.
• Accept orders through your own channels: Use commission-free online ordering systems like iOrders to keep more profit from every sale.
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What Is a Cake Shop Business?

A cake shop is a food business that specializes in creating and selling custom cakes, cupcakes, and baked desserts for celebrations, events, and everyday occasions. You can operate from a home kitchen, commercial space, or storefront, depending on local regulations and your business model.

Alt text:What Is a Cake Shop Business?

Most cake shops focus on a specific niche to stand out from the competition. For example, some specialize in wedding cakes with intricate designs, while others focus on themed birthday cakes for children.

Some bakers build their reputation around specific flavors like red velvet or tres leches, while others offer allergy-friendly options like gluten-free or vegan cakes.

Now that you know what a cake shop is and the different ways to run one, let’s take a detailed look at why so many bakers are making this move.
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What Are the Benefits of Starting a Cake Shop?

Starting a cake shop offers several advantages that make it an attractive business opportunity for skilled bakers.

• Turn creative passion into income: Instead of baking as a hobby, you can earn money doing what you love while building a business around your artistic vision and recipes.
• Low barrier to entry: You can start small from home with basic equipment, then scale up as you gain customers and revenue. Many successful bakeries started with a home oven and a social media page.
• Strong profit margins: Custom cakes command premium prices because customers value personalization and quality. A wedding cake that costs you $50 in ingredients and 4 hours of labor can sell for $300 to $600, depending on your market.
• Build a loyal customer base: When customers love your cakes for one celebration, they come back for birthdays, anniversaries, and other events. They also refer friends and family, creating organic growth.
• Flexible business model: You can start part-time while keeping another job, work from home to save on overhead, or eventually expand into a full retail operation with multiple employees.

These benefits make cake shops attractive, and getting started is more straightforward than most people think. Here's your complete roadmap.
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How to Start a Cake Shop: 8 Simple Steps

Starting a cake shop requires careful planning and execution across multiple areas. Here's how to do it right.
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Alt text:How to Start a Cake Shop: 8 Simple Steps
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1. Research Your Market and Define Your Niche

Before you invest money, you need to know who you're selling to and what makes you different.
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Start by researching local competition:

Visit other bakeries and cake shops in your area. Check their menus, prices, online presence, and customer reviews. Look for gaps in what they offer.

For example, if most shops focus on traditional designs, you could specialize in modern minimalist cakes. If no one offers vegan options, that's your opportunity.
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Define your target customer:

Your target market affects everything from your pricing to your packaging to where you advertise. Ask yourself:

• Are you serving budget-conscious parents who need birthday cakes?
• Are you targeting couples planning luxury weddings?
• Do you want to focus on corporate clients who need desserts for office events?
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Choose your niche:

Pick something you're good at and that people actually want to buy. Here are common niches:

• Wedding cakes: Require advanced decorating skills and the ability to handle stress on tight timelines.
• Cupcake shops: Need efficient systems for high-volume production.
• Custom character cakes: Appeal to parents but require artistic talent.
• Allergy-friendly options: Gluten-free, vegan, or nut-free cakes serve underserved markets.
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Tip: Test your concept before going all-in. Bake for friends, offer samples at local events, or sell through farmers' markets. Get honest feedback on your flavors, designs, and prices.
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2. Create Your Business Plan

A solid business plan guides your decisions and helps you secure funding if needed.
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Your plan should cover these key areas:

• Business concept: Describe your niche, target customers, and what makes you different from competitors.
• Product details: List your offerings, flavors, sizes, and customization options.
• Pricing structure: Outline how you'll price each product type to cover costs and generate profit.
• Marketing strategy: Explain how you'll attract customers through social media, partnerships, and promotions.
• Financial projections: Project startup costs, first-year revenue goals, monthly expenses, and break-even points. 
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Calculate startup costs realistically:

Include equipment, initial inventory, permits and licenses, insurance, website design, development, marketing materials, and at least three months of operating expenses.
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Set clear financial goals:

• How many cakes do you need to sell each month to cover expenses and pay yourself?
• What's your average order value?
• How will you price products to achieve your desired profit margin?

Note: Run the numbers before you commit. Many bakers underestimate costs and overestimate how quickly they'll attract customers.
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3. Handle Legal Requirements and Permits

Operating legally protects you from fines and builds customer trust.
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Research cottage food laws:

If starting from home, check your local cottage food laws. These laws vary by state and province:

• Some areas allow home bakers to sell directly to customers up to a certain annual revenue limit.
• Others require you to use a commercial kitchen regardless of sales volume.
• Contact your local health department for specific requirements.

Apply for necessary licenses and permits:

You'll need several documents to operate legally. Here's what most cake shops require:
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Register your business entity:

Most small bakeries start as sole proprietorships or limited liability companies (LLCs). An LLC protects your personal assets if someone sues your business.

Tip: Consult with an accountant or lawyer to choose the right structure for your situation.

Get proper insurance coverage:

Insurance protects your business from unexpected claims and losses. Here are the main types of insurance cake shops need:
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4. Set Up Your Kitchen and Buy Equipment

Your kitchen setup directly impacts your production capacity and product quality.
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Essential equipment to start with includes:

• Commercial oven: Invest in an oven with accurate temperature control and enough capacity for multiple cake pans. Convection ovens bake more evenly than standard models.
• Stand mixer: A heavy-duty stand mixer handles thick batters and large volumes better than hand mixers. Get one with multiple speeds and a large bowl.
• Refrigerator and freezer: Commercial units maintain consistent temperatures critical for food safety. You need space to store ingredients, finished cakes, and prepared components.
• Work tables: Stainless steel tables provide a clean, durable surface for mixing, rolling fondant, and assembling cakes.
• Baking pans: Stock multiple sizes and shapes, including round pans, sheet pans, and specialty shapes. Buy professional-grade pans that distribute heat evenly.
• Decorating tools: Essential items include piping bags, tips in various sizes, offset spatulas, turntables, fondant tools, and food coloring.
• Scales and measuring tools: Accurate measurements are critical for consistent results. Digital scales are more precise than measuring cups.
• Packaging materials: You need cake boards, boxes, ribbons, and labels that protect your products and showcase your brand.

Tip: Start with essentials and add specialized tools as you take on more complex projects. For example, you don't need an airbrush system until you're regularly creating detailed painted cakes.

Source reliable ingredient suppliers:

Build relationships with wholesale vendors who can provide consistent quality at better prices than retail stores. Restaurant supply stores or online bulk retailers often offer significant discounts on flour, sugar, butter, and other staples.

Organize your workspace:

• Set up distinct zones for mixing, baking, decorating, and packaging.
• Keep frequently used tools within easy reach.
• Store ingredients with clear labels and rotation systems to prevent waste.

Note: An efficient workspace reduces movement and speeds up production, letting you handle more orders without working longer hours.
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5. Develop Your Pricing Structure

Pricing correctly is critical for profitability. Too low and you can't sustain the business. Too high and customers go elsewhere.

Calculate your cost of goods sold:

Add up all ingredient costs, packaging materials, and any direct labor hours for each product.

For example:

• Ingredients: $8
• Packaging: $2
• Labor (2 hours at $25/hour): $50
• Total cost: $60

Factor in overhead costs:

Calculate your monthly fixed costs like rent, utilities, insurance, and website fees. Divide by your expected monthly order volume.

For instance, if your monthly overhead is $1,000 and you expect to sell 50 cakes, add $20 per cake for overhead.

Add your desired profit margin:

Most bakeries aim for a 50-70% gross profit margin.
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Research competitor pricing:

If similar cakes in your area sell for $100 to $200, your $200 price fits the market. If everyone charges $75, you need to either lower costs, emphasize premium quality, or reconsider your business model.

Pricing tips:

• Don't compete on price alone. Customers who only care about the cheapest option will leave you for a competitor who undercuts you by $5.
• Compete on quality, service, unique designs, or convenience instead.
• Review and adjust prices regularly based on what sells well and what doesn't.

Need help managing pricing, inventory, and orders as you grow? iOrders makes it easy to update your menu and prices anytime. You can test different price points and see what works without technical hassles. Book a free demo to learn more.
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6. Build Your Online Presence

Most customers search online before buying, so your digital presence matters as much as your baking skills.

Create a professional website with online ordering:

Your site should include:

• High-quality photos showcasing your best work
• Clear product listings with prices
• Explanation of your ordering process and policies
• Your story and what makes you different
• An online ordering system so customers can place orders without calling or emailing

Tip: Using your own website instead of relying on social media or third-party apps gives you control over customer relationships and data. You keep full profit from every order instead of paying commission fees.

Set up social media accounts:

Instagram and Facebook are ideal for food businesses. Post content like:

• Photos of finished cakes
• Behind-the-scenes content
• Customer testimonials
• Special promotions

Use local hashtags to reach nearby customers. Respond quickly to comments and messages.

Collect customer information:

When someone places an order through your website, you capture their email and phone number. This lets you send them promotions, birthday reminders, and seasonal offers to encourage repeat orders.

Want to take orders online without paying high commission fees? iOrders helps cake shops and bakeries accept orders through their own branded website. You keep more profit from every sale. Book a free demo to see how it works.
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7. Market Your Cake Shop

Great products don't sell themselves. You need to actively promote your business to attract customers.

Start marketing before you officially open:

• Build excitement by sharing your progress on social media.
• Offer pre-opening discounts to early customers.
• Ask friends to spread the word.
• Reach out to local event planners and wedding coordinators who can refer clients.

Offer different promotions to attract first-time customers:
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Network in your community:

• Attend local business events and join your chamber of commerce.
• Donate cakes to charity auctions or school fundraisers.
• Partner with complementary businesses like wedding venues, party supply stores, or coffee shops.
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Ask satisfied customers for reviews and referrals:

After they receive their order, send a follow-up message asking them to leave a review on Google or Facebook. Offer a small discount on their next order as a thank you.

Tip: Positive reviews build credibility and attract new customers who are researching cake shops in your area.
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8. Manage Orders and Operations Efficiently

As orders increase, you need systems to stay organized and deliver consistent quality.
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Track orders with a calendar or order management system:

If you have three wedding cakes due the same weekend, you need to schedule prep work, baking, decorating, and delivery times carefully to avoid last-minute chaos.
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Create standard recipes and processes:

• Document your recipes with exact measurements and steps so you can train helpers if needed.
• Develop checklists for common tasks like preparing for a delivery or closing your kitchen at night.

Set clear policies:

• Require deposits for custom orders to reduce no-shows.
• Define your cancellation policy upfront.
• Specify delivery fees and minimum order amounts.

Note: Having clear policies prevents misunderstandings and protects your time.

Track your finances meticulously:

Record every expense and sale. Review your numbers weekly to spot trends:

• Are certain products more profitable than others?
• Which marketing channels bring in the most orders?
• What's your average order value?

Use this data to make smarter decisions about where to focus your energy.

So, you've put in the work to create amazing cakes. You've figured out permits, equipment, and pricing.

Now you need a way to take orders and get paid without losing a big chunk of your profit to third-party apps.
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Take Orders Online and Keep More Profit with iOrders

Many cake shops start by taking orders through phone calls, texts, and direct messages. This works at first but becomes overwhelming as you grow. You miss orders when you're busy baking. Plus, tracking everything in notebooks or scattered messages leads to mistakes.
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Alt text:Take Orders Online and Keep More Profit with iOrders

Third-party delivery apps seem like an easy solution, but they charge 15% to 30% commission on every order. On a $100 cake order, you might pay $30 in fees before you even cover your costs. These apps also own the customer relationship, so you can't build loyalty or collect contact information for future marketing.
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iOrders gives you a better way to accept orders, manage customers, and grow your business without giving up control or profit.

Here's how iOrders helps cake shops succeed:

• Commission-Free Online Ordering: Accept orders through your own branded website with no commission fees. You pay a fixed cost per order instead of a percentage, so you keep more profit from every sale.
• Website and QR Ordering: Customers can place orders anytime from your website or by scanning a QR code at your shop. No phone calls needed, and orders go directly to your system.
• Delivery-as-a-Service: Integrate delivery options seamlessly so customers can choose pickup or delivery at checkout. You can use your own drivers or connect with delivery partners.
• Loyalty and Rewards: Build customer loyalty by offering points, discounts, or birthday rewards through your own platform. Keep customers coming back instead of losing them to third-party apps.
• Smart Campaigns: Send targeted messages and promotions to customers who've ordered before. Remind them about holidays, special occasions, or new products to drive repeat orders.

With iOrders, you own your customer data and relationships. You can update your menu and prices anytime without calling tech support. You get paid directly to your bank account instead of waiting for third-party platforms to release your funds.
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Final Thoughts

Starting a cake shop requires a solid business plan, proper permits, the right equipment, smart pricing, and an effective way to attract and serve customers.

The bakers who succeed are the ones who treat their cake shop like a real business from day one. They track finances carefully, invest in quality tools, price products for profit, and build systems that let them scale without burning out.

Your online presence matters just as much as your baking. Customers want to see your work, read reviews, and place orders easily. Using your own website gives you control over the customer experience and helps you keep more profit from every sale.

Ready to accept orders online without paying high commissions? iOrders helps cake shops and bakeries grow with commission-free online ordering, branded websites, and tools to manage everything in one place. Schedule a free demo to see how it works for your business.
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FAQs

1. Do I need a license to sell cakes from home?

Yes, most areas require business licenses, food handler permits, and health department approval even for home-based operations. Check your local cottage food laws for specific requirements in your city or province.

2. How much should I charge for a custom cake?

Calculate your ingredient cost, labor hours at your desired hourly rate, and overhead expenses. Then add a 50-70% profit margin. A cake that costs you $50 to make should sell for $100 to $150, depending on your market.

3. What's the most profitable cake to sell?

Custom celebration cakes typically have the highest profit margins because customers value personalization and convenience. Wedding cakes and themed birthday cakes command premium prices compared to basic sheet cakes.

4. How do I get customers for my new cake shop?

Start with your personal network, build a strong Instagram presence with high-quality photos, partner with wedding planners and event coordinators, participate in community events, and run limited-time promotions to attract first-time buyers.

5. What food safety certifications do I need?

Requirements vary by location, but most areas require food handler certification for you and any employees. You may also need to pass health inspections of your kitchen and follow specific food labeling regulations.