The reason is that the answers to your questions are going to depend on where you are, how much competition you have, how much illegal competition you have, and a bunch of other things that are location-dependent. Asking a group of people who live in vastly different places about how you should run your business is a waste of time.
I was talking to a baker who was debating whether to open a home-based business recently. She was also located in Virginia, and said that her market was saturated so she wasn't sure if it was even worth the effort.
She got the usual advice from people online. "Find your niche!" "Follow your dreams!" "Go for it, you got this!"
Now, this particular person was no idiot, so she said that when she read that advice she just laughed to herself. She told me that the every niche in her market was pretty well-covered, and that following her dreams wasn't going to help a business plan work out.
A niche is a niche because it's small. Telling someone who's in a saturated market that all she has to do is find her niche is seriously irresponsible advice. In some markets it's more important to find a way to expand, not contract, your product line. It all depends where you are and what's going on in your area, and people who don't live anywhere near you don't know anything about it.
Another Virginia baker got into the discussion and said that even though she has a busy wedding cake business, if she knew then what she knows now, she wouldn't have started her business. She said that with the state of the market in our area, it's one thing to have a hobby income-type business, but when you have to pay the bills with it, custom cakes are too dicey these days. There's no guarantee that you'll be able to support yourself in this area with a home-based cake income if you needed to.
That might be different in different areas, but unless the person you're asking knows your market, they don't know if it's different for you.
And if you want to ignore the advice and just go live your dream, then at least do your research and be realistic about it. Don't quit your day job based on the advice of someone who lives a thousand miles away and who doesn't sell cakes themselves. Find some people in your area and see what they say. Check out their websites and pricing. See if they're on facebook scrambling for business. If they are, you might end up there too if you're not careful.