Hi
So are you and DP both looking to do bits and pieces in order to make a living? As a complete outsider to your situation, it does sound rather challenging esp with young DC mixed in, but the challenge might excite you and and DP?
I went freelance at the start of the year but only because my DP has a stable job and we knew could just about live on his wage if I earnt nothing. However, we are fairly risk adverse, so the idea of both of us trying to make money as you describe frightens me, but I am guessing there are others that would like it.
I think being realistic has to be the key. How much can you actually make on selling cupcakes (50p/£1 per cake I'd guess) and how many are you going to sell at one session to cover the time it takes to shop for ingredients, make them, decorate them, walk/drive them to the venue, spend time selling them/chatting to the customers, and then drive/walk any left overs back again. Am guessing playgroup etc might also want a cut for you being there?
I would think that the most profitable thing from what you suggested is being a virtual assistant, esp with your background. And whilst local companies couldn't afford to hire a full time PA/VA, they might be able to afford some hours from a VA each week. However, the VAs I have met since I went freelance are really into networking and developing their business, I do wonder if you can do it "just a little bit" or I guess if you don't you limit what you could earn.
Have a look on www.peopleperhour.com there are lots of people posting odds and sods they need doing. PPH jobs tend to be low pay, but it can sometimes fill a gap and gain you experience/contacts for follow on work.
If you became a VA it wouldn't matter where your clients are.
Not sure if that helps. Good luck with it.
WS