A cake pop business plan is a plan for minutes. The cake, frosting, candy melts and stick in a pop cost about 27 cents; rolling, chilling, dipping, decorating and bagging take three minutes for a basic pop and six for a custom one, and that time is most of what a pop costs. So the plan has to pay the minutes, price custom designs from the minutes they take, and find the orders that fill a week. In the example below, a home baker in Wyoming sells basic and custom dozens, wedding favors and cake pop bouquets, and ends the first year about $11,400 ahead on $33,300 of sales, after paying $20 an hour for about 650 hours. Below is a description example, each part of the plan, the first year month by month, the startup budget, and a free template.
The short version
- Describe the business in a paragraph: the pops, the orders, where you sell, the goals.
- Cost a dozen from the batch up: cake and frosting, candy melts, sticks, decorations, bags, and every minute.
- Custom designs are twice the minutes, so they're nearly twice the price.
- Wedding favors are the biggest orders; bouquets turn a dozen into a gift.
- A home kitchen under the cottage food law keeps the fixed costs small.
- TaroStack keeps candy melts by color, every batch costed, and orders by pickup day. More below.
Part 1: the business description
Bluebird Cake Pops, a made-up home baker in Cheyenne, Wyoming, I use in these examples, writes:
Bluebird Cake Pops makes cake pops to order in a home kitchen under the state's cottage food rules: basic dozens, custom themed dozens for birthdays and showers, wedding and party favors, and cake pop bouquets, for pickup or local delivery.
Part 2: what each order costs
A batch of cake and frosting costs $4.50 and makes 48 pops, and a $3.50 bag of candy melts coats about 24.
| Per unit | Basic dozen | Custom dozen | 100 favors | Bouquet of a dozen |
|---|---|---|---|---|
| Cake, frosting, candy melts and sticks | $3.24 | $3.24 | $26.96 | $3.24 |
| Sprinkles, or custom decorations | $0.60 | $3.00 | $5.00 | $0.60 |
| Bags and ribbon, or a vase and foam | $1.20 | $1.20 | $10.00 | $5.20 |
| Time at $20 an hour | $12.00 (36 min) | $24.00 (72 min) | $83.33 (4 h 10 min) | $15.33 (46 min) |
| Card fees, 3% | $0.89 | $1.71 | $6.75 | $1.35 |
| Variable cost | $17.93 | $33.15 | $132.04 | $25.72 |
The time is two thirds of a basic dozen's cost and nearly three quarters of a custom dozen's. It covers the whole batch: baking and cooling, crumbling into the frosting, rolling, chilling, dipping, decorating, setting and bagging. How each was priced is in how to price cake pops, and how to put hours into a cost is in how to compute labor cost in baking.
Part 3: customers and prices
| Product | Price | Variable cost | Contribution | Margin | A month at full speed |
|---|---|---|---|---|---|
| Cake pops, basic dozen | $30.00 | $17.93 | $12.07 | 40.2% | 60 |
| Cake pops, custom themed dozen | $57.00 | $33.15 | $23.85 | 41.8% | 30 |
| Wedding favors, 100 basic pops | $225.00 | $132.04 | $92.96 | 41.3% | 3 |
| Cake pop bouquet, a dozen in a vase | $45.00 | $25.72 | $19.28 | 42.8% | 15 |
At full speed the basic and custom dozens bring about the same, $720 each, of the month's $2,010 of contribution, the favors about $280 and the bouquets about $290. Every order is priced to about the same margin, so what differs is how many it takes: 30 custom dozens fill 36 hours, the same as 60 basic dozens. A bouquet is a basic dozen arranged in a vase for ten minutes more, and it sells for $15 more. Pricing other baked goods is in how to price baked goods.
Part 4: the first year, month by month
Fixed costs are $200 a month: the cottage food license averaged ($5), insurance ($30), the website and ordering ($30), marketing ($60), delivery fuel ($40), and software and card fees ($35). Sales start at 15% of full speed and reach it in month 11:
| Month | Basic dozens | Custom dozens | Favor orders | Bouquets | Sales | Profit | Cash, year to date |
|---|---|---|---|---|---|---|---|
| 1 | 9 | 5 | 0 | 2 | $645 | $66 | $66 |
| 2 | 12 | 6 | 1 | 3 | $1,062 | $239 | $305 |
| 3 | 15 | 8 | 1 | 4 | $1,311 | $342 | $647 |
| 4 | 18 | 9 | 1 | 5 | $1,503 | $421 | $1,068 |
| 5 | 24 | 12 | 1 | 6 | $1,899 | $585 | $1,653 |
| 6 | 30 | 15 | 2 | 8 | $2,565 | $860 | $2,513 |
| 7 | 36 | 18 | 2 | 9 | $2,961 | $1,023 | $3,536 |
| 8 | 42 | 21 | 2 | 11 | $3,402 | $1,206 | $4,742 |
| 9 | 48 | 24 | 2 | 12 | $3,798 | $1,369 | $6,111 |
| 10 | 54 | 27 | 3 | 14 | $4,464 | $1,645 | $7,756 |
| 11 | 60 | 30 | 3 | 15 | $4,860 | $1,808 | $9,563 |
| 12 | 60 | 30 | 3 | 15 | $4,860 | $1,808 | $11,371 |
The year's sales are $33,330 and the profit $11,371, on top of about 650 hours paid at $20, about $13,000. At full speed that's about 96 hours a month, about 22 a week. Profit from the first month, because a home kitchen's fixed costs are small; the hours are the limit, and weddings and holidays bunch them up.
Part 5: the startup budget
| Item | Example |
|---|---|
| Stand mixer | $450 |
| Cake pop tools and display stands | $150 |
| Candy melt warmer | $80 |
| Second fridge for chilling | $500 |
| Bags, sticks and ribbon, first order | $200 |
| Photo setup and website | $300 |
| Working cash | $500 |
| Total to start | $2,180 |
Cake pops are baked goods, which state cottage food laws generally allow from a home kitchen and sold directly to customers, within each state's limits; frostings or fillings that need refrigeration are another matter. What to check is in how to start a cottage food business. At $11,400 a year, the $1,680 spent before working cash is earned back by month 6.
Get the template
Download the cake pop business plan workbook. Four sheets: your dozens, favors and bouquets with price, variable cost and a month's volume at full speed; the first year, month by month, with sales, profit and cash; your fixed costs; and your startup budget with working cash. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
Candy melts in fourteen colors, a wedding's 100 favors in the couple's two colors, five custom dozens due Saturday, each a different theme, and sprinkles that run out on Friday night. A notebook can't say how many bags of blush pink melts are left, which orders need them this week, or what a custom dozen costs now that candy melts went up.
How TaroStack does it
TaroStack keeps candy melts by color, every batch costed, and orders by pickup day.
Candy melts and sprinkles as stock. Each color is an item, bought by the bag, counted on a phone, with a reorder list in days of cover, so the blush pink is ordered before the wedding needs it.
Pops as recipes. A dozen is a recipe of its cake and frosting, melts, sticks, decorations and bags; each batch takes them off stock at what they cost, with the minutes it took.
Orders by day. Each order is a sales order for its pickup or delivery day, so Saturday's dozens and the melts they need are one list, and "what could I make right now" says whether there's enough.
| The job | Notebook | In TaroStack |
|---|---|---|
| Blush pink melts left | Check the cupboard | Stock by color |
| What Saturday's orders need | Add it up by hand | Sales orders by day |
| What a custom dozen costs now | Last year's number | Each batch, at what it used |
| Melts before the wedding | When the bag is empty | Reorder list in days of cover |
Recipes, batches, sales orders and reorder lists are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.