If you are selling the cake, you would want to stick to buying a licensed Elmo cake topper (or having the customer buy it) and putting it on a generic cake, something like a white background with a red border.
Pencils, letters, numbers, stars, bright colors.
There's even an example here that you can do by putting the party hat on top in case they don't have a figure.
http://www.flickr.com/photos/cakesuniquebyamy/4755557908/
http://www.flickr.com/photos/cakesuniquebyamy/4804951548/
http://www.flickr.com/photos/25016830@N03/4097455017/
http://www.flickr.com/photos/epiccakes/3300010841/
http://www.flickr.com/photos/laurashamir/5320934895/
http://www.flickr.com/photos/leoniescreations/5067410732/
http://www.flickr.com/photos/itsacakething/4915772120/
http://www.flickr.com/photos/25863947@N05/2923783410/
http://www.flickr.com/photos/sugarcoatedmommy/5238219047/
Stick to primary colors with it and maybe you can make a sign like the sesame street sign, but put the child's name? You can also put Elmo's goldfish, Dorothy..
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