How to Start a Cupcake Business

Date: July 22, 2013

How to Start a Cupcake BusinessFinding your niche in the bakery business can bring sweet rewards.

A cupcake business can be a sweet entrepreneurial opportunity. Here’s how three small bakeries found niches that worked well in their communities.

Turning Lemons into Lemon Chiffon

Laurie Blakey thought Laura Condrey would be the perfect successor to her real estate practice when she retired at age 50. Instead, the pair teamed up to open Pearl’s Cupcake Shoppe, named after Laurie’s grandmother. They focused their Richmond, Virginia-based bakery not only on delivering great taste but also on accommodating common dietary restrictions, including vegan, sugar-free, gluten-free and soy-free. "We’ll ask 'are you getting that for someone who’s gluten-free,' and a customer will say, 'oh, no, I just like the flavor,'" Condrey says.

Fortunately Pearl’s early challenges turned out to be treats in disguise. Heavy snow, clumsy delivery crews, and power challenges delayed a planned pre-Valentine’s opening date, but Blakey and Condrey saved operating costs for closed winter storm days. They also did not expect a 30-person line outside at opening and a steady customer stream all through that day, not to mention free publicity via a local newspaper article. They had hired one other baker, a local college student with a reputation for great gluten-free products, but had to call in their husbands, Blakey’s son and Condrey’s best friend to weather that first day.

A start-up bakery should plan ahead not just for problems but also for success, Blakey advises. When cupcake demand grew quickly, mostly by word of mouth, revenues needed to be reinvested into more baking supplies and equipment, including a second oven, which also meant a need for extra ventilation. "We shut the shop and took the staff to the beach one weekend when that was installed," Blakey says.

The pair also waited a year to launch wedding catering, giving them time to save money for a leased delivery van. Wedding attendees became new shop customers, she added, contributing to an estimated 50-50 split between walk-in and catering business. Pearl’s now has 20 employees at the Richmond store, which they doubled in size, and another eight at a Charlottesville, Virginia, location that launched in May 2013.

RELATED: How to Start a Catering Business

Young Entrepreneur Succeeds with Gourmet Bakery

Shea Gouldd, NFIB's 2013 Young Entrepreneur of the Year, owns and operates Shea’s Bakery, a gourmet bakery that she founded at the age of 14. Over the last several years, Shea’s Bakery has gained notoriety and attention for her made-to-order baked goods, becoming the No. 1 bakery in Delray Beach, Florida according to and a preferred wedding cake vendor at local hotels. Learn More »

Walk-in Traffic Isn’t Always an Essential Ingredient

As the managing partner of two event-management companies, Steve Goodwin regularly ordered cupcakes from Atlanta-based Little Cake Bakery and was one of the family-owned business’s biggest customers. So when he heard the original owners wanted to retire, he purchased the operation. With several large cupcake providers in the market, he decided to focus on offering quality logo-adorned cupcakes to corporate, convention and family event clients.

Noting that less than 10 percent of Little Cake Bakery’s sales came from walk-in traffic, but 80 percent of revenues went to running the retail location, he closed the shop and negotiated using the kitchen in the morning at two locations of Buckhead Pizza, a local restaurant that doesn't serve breakfast. The pizza venue also added Little Cake’s cupcakes to its dine-in and take-out menus, and in the first two weeks, Little Cake’s retail business was up by 10 percent. "We reduced our overhead, and we’ll also get much more exposure," Goodwin says. "At the same time, we can keep our focus on our corporate and private special-order business."

RELATED: Run Your Business Like a Startup Competition Winner

Find the Right Pairings for Your Cupcakes

When Alexis Gorsuch became a new mother, she wanted a business opportunity that she could manage part-time and that would allow her to cultivate her artistic side. She contracted a kitchen at a coffee shop near her home in Flowery Branch, Georgia, and launched The Sugar Dolls in spring 2010. "We really kind of invested in the coffee shop as they invested in us," Gorsuch says. "The contract was simple: We used the kitchen on non business hours, while they got a percentage of each and every order."

Gorsuch marketed The Sugar Dolls as a preferred cupcake vendor for Atlanta’s art, theater, nightclub and music scene. While she has kid-friendly products, she also makes "adult" cupcakes with a splash of liquor that can be set aflame. Playing into the Retro Revival scene, Gorsuch dresses pin-up-girl style with cat-eye glasses, a bow headband, and a vintage-fabric apron, and she hires additional costumed Sugar Dolls to give out free samples and make sales at events.

Finally, to lock down her brand identity with her eclectic audience, Gorsuch has teamed up, for the past three years, with a popular local tattoo parlor and nightclub to throw an annual Day of the Cupcake in October featuring cupcake-themed games, contests, cupcake tattoos, live music and, of course, cupcakes.

RELATED: Image Can Be Everything When It Comes to Small Business Success

Get your business off the ground. Find out everything you need to know about starting a business»

Subscribe For Free News And Tips

Enter your email to get FREE small business insights. Learn more

Get to know NFIB

NFIB is America's leading small business association, promoting and protecting the right of our members to own, operate and grow their business

Find out more about
NFIB Membership

Or call us today