Originally Posted by costumeczar
The profit margin on decorated cakes is a lot lower than other sources of cake-related income, and you have to make a lot to make a decent living. It also takes more time to make that profit. If I make a $500 cake my net income from that is about half of it after I take out expenses, advertising, ingredients, insurance, etc etc etc. There's also the time invested in getting those cakes by marketing yourself and dealing with clients. If I can earn $250 for teaching a two-hour class that takes an hour of prep time I've just made the net amount from one cake plus saved myself a heck of a lot of time and effort. Cakes alone will not make you rich.
I saw one baking forum once where somebody had posted a question about what kinds of retirement programs are offered to bakers. I think he was thinking about going into the baking industry and wanted to know about his future pension etc. All the bakers on there basically laughed at him and said the retirement program was that you don't get one and you can basically plan on working until you can't physically work anymore. That's something that you also need to think about if you go into this business. You'll need to take responsibility for your own retirement savings since you're not going to have a boss matching a 401K for you.
1. I said this in another thread, but I'll reiterate: In the world of food production, bakery goods, including cakes, are considered loss leaders for the reasons you just described. You've got a make a ton of cake, cupcakes, bread, etc., in return for a tiny bit of profit. I know a couple of licensed home bakers who have had to take day jobs because, as sole proprietors, simply don't make enough money just doing cakes. One of them expanded into other baked goods in addition to cakes, and it still wasn't enough.
2. Unless you're a baker working for a company, this is true -- there are no 401Ks nor pensions in this business. You have to be able to look further ahead and prepare yourself now, such as investing in a Roth IRA or investing some money via a brokerage. I know one old-time baker who worked his FT morning baking job then went to FT non-baking job. He'd get home around 10 or 11PM, sleep for a couple of hours, and be up and at the baking job by 4AM. He did this for years. He retired from both jobs when he was in his late 50s with a nice chunk of change from both companies for his retirement.