The retail baking industry generated $3 billion in 2010, with 6,000 bakeries in operation. The 2,800 commercial bakeries in the U.S. generated $30 billion in sales. Grab a healthy slice of this economic pie by operating a cake bakery business. To make sure your profits rise like your cakes in the oven, put together a well researched -- not half-baked -- strategic plan. Determine specific implementation steps or action plans for each strategy.

Product Development Strategy

A key success factor for your bakery business is your ability to anticipate changes in your customers' tastes in cakes. Monitor trends by studying bakery industry trade journals and visiting your competitors stores or websites to see what new cake products they are offering. Come up with a rollout strategy so you have something new to offer and promote at least once a month. Develop your own signature cake recipes with unusual combinations of ingredients. Survey your customers in-store or through email about what new cake creations they would like to see.

Distribution Channel Strategy

Decide whether you want to be a wholesale bakery that sells to retail stores like gourmet grocery markets, or open your own retail location, or both. You also may elect to serve niche markets such as wedding caterers. Use your website as an extension of your retail location. Include sharp pictures of your most scrumptious cakes. Have an order page where customers can design their own cakes by selecting size, style, frosting and decorations. Let them pick up the cake at your store or your bakery, or deliver it to them upon request. As time goes on, develop a strategy for expanding these channels. The more places your cakes are available, the more well known your bakery will become.

Competitive Strategy

Differentiating your cake product menu from those of your key competitors is part of your strategy, but also consider pricing. Undercutting your competitors' prices can help bring in new customers but negatively impact your margins. Your customers should be willing to pay more for cakes they can't get anywhere else. Try a strategy of varying prices and see what your customers' sweet spot is when it comes to the cost of a cake. Your marketing message delivered through all communications with customers -- advertisements, your website and store signage -- should focus on one or a few product and service features of your bakery clearly superior to competitors. You could become known as the chocolate lover's bakery, for example. Or go with current trends for healthier eating and be known for your gluten-free cakes.

Expansion Strategy

When your cake business is established and running smoothly, start thinking of new directions to take your venture. Don't define your business too narrowly. Think outside the cake pan and identify other popular baked goods you could present to your customers, expanding your total potential market Your skill at coming up with fresh ideas for cake styles can help you design your own line of artisan breads, for example, which are high margin items because of customers' perception that they are gourmet foods.