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How to Start a Sperm Bank Business

Cryobank and Sperm Bank Business

Do you want to start a sperm bank? If YES, here is a complete guide to starting a sperm bank business with NO money and no experience plus a sample sperm bank business plan template.

With the increasing popularity in the sperm bank line of business, entrepreneurs with medical and fertility backgrounds are beginning to pitch their business tents in the industry, so if you are interested in the business, you can as well launch your sperm bank business in the united states.

A sperm bank which is also known as cryo-bank is a facility or enterprise that collects and stores human sperm from sperm donors for use by women who need donor-provided sperm to achieve pregnancy.

A sperm bank is one of those businesses that require you to first look at the existing laws in the country or the state you reside before going all out to start the business.

This is so because there is hardly any country that does not pay serious attention to their health sector especially as it relates to procreation.  You would need to pay a visit to the health and medical regulatory body in your country to get all the needed information before you can legally start your own sperm bank business in your city.

Steps to Starting a Sperm Bank Business

1. Understand the Industry

Sperm bank business falls under the Fertility Clinics industry and this industry comprises of medical facilities that aid individuals in conceiving children. Aside from sperm bank, these facilities offer diagnosis, medications, intrauterine insemination, in vitro fertilization and other assisted reproductive technology methods.

In recent time, increased interest in assisted reproductive technology (ART) has driven revenue higher as more people have sought alternative ways to have children. Because of the sensitive nature of the business, in the United States, sperm banks are regulated as Human Cell and Tissue or Cell and Tissue Bank Product (HCT/Ps) establishments by the Food and Drug Administration.

A good number of states also have regulations in addition to those imposed by the Food and Drug Administration. So also, in Europe, a sperm bank must have a license according to the EU Tissue Directive. While in the united kingdom, sperm banks are regulated by the Human Fertilization and Embryology Authority.

A recent research conducted shows that in the last five years, the Sperm Banks industry has expanded greatly. The revenue generated in the industry is expected to grow at an average annual rate of 2.4 percent to $320.9 million. Meanwhile, the recession did result in fewer clients, as consumers pulled back on their spending and avoided large expenses like having children.

The Fertility Clinics industry that sperm bank business is a part of is indeed a very massive industry in the United States. Statistics has it that the industry is worth $2 billion, with an estimated growth rate of 4.2 percent within the next five years.

There are about 493 registered and licensed fertility clinics (sperm banks inclusive) in the United States and they are responsible for employing about 17,630 people that comprises of doctors, nurses, pharmacists, dentists, opticians, surgeons and other health and non – health workers. It is important to state that IntegraMed has the lion share of the available market in the industry in the United States.

A recent report published by IBISWorld shows that the Fertility Clinics industry relies more on labor than capital and that depreciation costs are expected to account for about 2.7 percent of total industry revenue in 2016, whereas wages are estimated to account for 40.3 percent of revenue. As a result, the industry’s capital intensity is relatively low.

The report further shows that in 2015, for every dollar spent on labor, industry enterprises will invest an estimated $0.07 in capital, on average. Equipment leasing and outsourcing testing to third-party facilities minimize the capital depreciation costs associated with the high-tech treatments that fertility clinics provide.

This also minimizes expenditures on machinery that may become obsolete if a new technology enters the market and enables better fertility treatment outcomes.

If you are considering starting your own sperm bank in the United States, then you should try and work around the industry barriers. The truth is that the barriers to entry in the Fertility Clinics industry are high because of the significant regulatory requirements, the experience and strength of incumbents.

As a matter of fact, it is absolutely compulsory for any investor who is looking towards starting a sperm bank business to meet extensive federal, state and local laws and regulations. These regulations relate to the adequacy of medical care, equipment, personnel, operating policies and procedures.

Regulations also involve maintaining adequate records, preventing fires, setting rates and complying with building codes and environmental protection laws. These regulations make it difficult and costly for aspiring entrepreneurs to enter the industry.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic composition of those who need the services of a sperm bank cum fertility clinic is not restricted to the female gender alone. Single women and coupled lesbians, heterosexual couples where the male is infertile or where the male is finding it challenging to impregnate his wife, are all potential customers of a sperm bank cum fertility clinic.

3. Decide Which Niche to Concentrate On

It is important to establish that there is no niche area in the sperm bank line of business since sperm bank is a niche idea in the Fertility Clinic industry.

The Level of Competition in the Industry

The level of competition in the sperm bank line of business is not intense especially when it is compared to other businesses in the healthcare industry. As a matter of fact, a new player in this line of business will face very minimal competition irrespective of the location they choose to establish their sperm bank.

4. Know Your Major Competitors in the Industry

It is important to note that in every industry, there are always brands who perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long time, while others are best known for how they conduct their businesses and the results they have achieved over the years.

These are some of the leading sperm banks and fertility clinics in the United States of America and in the globe;

  • Seattle Sperm Bank
  • Manhattan CryoBank
  • Sperm Bank of California
  • Fairfax Cryobank
  • Pacific Reproductive Services
  • Xytex Cryo International
  • New England Cryogenic Center, Inc.
  • California Cryobank Inc.
  • Fertility Center of California, Sperm Bank Inc.
  • Fertility Center of California, Sperm Bank Inc.
  • Cryos International – USA
  • Midwest Sperm Bank
  • International Cryogenics Inc.
  • N W Andrology & Cryobank
  • NW Cryobank
  • Repro Lab
  • CHA Fertility Center
  • Gramercy Fertility and IVF Services of New York
  • Rainbow Flag Health Services
  • Daniel A. Potter, M.D.
Economic Analysis

When starting a sperm bank business, you just have to get your costing cum economic analysis right if your intention of building the business is to generate profit, grow and perhaps expand the business and start competing at national level.

When conducting costing and economic analysis for your sperm bank business, you just have to critically examine these key factors; place, pricing, and promotion. As a matter of fact, you would have to continue to review these key factors at regular intervals while running your sperm bank business.

As a sperm bank business owner, you just have to have a proper grasp of your competitive landscape if indeed you want to maximize profits and be in the frontline of the industry.

Even if most often than not you are not expected to pay for sperm since they are gotten from free donors, it is important to note that renting, medical lab equipment, running cost and overhead cost are some of the most important factors contributing to the overall cost of running a sperm bank business and should be considered as major factors when carrying out your costing and economic analysis.

5. Decide Whether to Buy a Franchise or Start from Scratch

If you are looking towards starting a sperm bank business, you would have to start from the very scratch because you can hardly get the franchise of a sperm bank business to buy. It is a business that is open to all and sundry as long as you have what it takes to run the business.

6. Know the Possible Threats and Challenges You Will Face

If you decide to open your own sperm bank today, one of the major challenges you are likely going to face is the presence of well – established sperm banks and of course fertility clinics in your target market location. The only way to avoid this challenge is to create your own market.

Some other threats and challenges that you are likely going to face when you start your sperm bank business are bad economy (economy downturn) which usually affects child bearing, and rising medical and lab equipment prices.

Also, unfavorable government policies, demographic, religion and social factors and of course emergence of new competitors within the same location where yours is located. There is hardly anything you can do as regards these threats and challenges other than to be optimistic that things will continue to work for your good.

7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

When considering opening a sperm bank or any medical related business, the legal entity you choose will go a long way to determine how big the business can grow. You can either choose general partnership or limited liability Company for a sperm bank or fertility clinic.

Ordinarily, general partnership should have been the ideal business structure for a small scale sperm bank business especially if you are just starting out with a moderate startup capital, in a small facility and with minimal employees. But if your intention is to grow the business and operate all across the United States of America, then choosing general partnership is not an option for you. Limited Liability Company, LLC is just a perfect fit for you.

Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.

These are some of the factors you should consider before choosing a legal entity for your sperm bank business; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.

If you take your time to critically study the various legal entities to use for your sperm bank business, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.

8. Choose a Catchy Business Name

Normally, when it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Typically, it is the norm for people to follow the trend in the industry they intend operating from when naming their business.

If you are considering starting your own sperm bank business, here are some catchy names that you can choose from;

  • Clear Genetics® Sperm Bank, LLC
  • Heart of Gold® Sperm Bank, Inc.
  • Andreas Lincoln Memorial® Sperm Bank and Fertility Clinic, Inc.
  • G T Rowling® Sperm Bank, Inc.
  • Pro Create® Sperm Bank & Fertility Clinic, Inc.
  • Life Gate® Sperm Bank, Inc.
  • Adam & Eve® Sperm Bank & Fertility Clinic, Inc.
  • Fresh Droplets® Sperm Bank, Inc.
  • Mother Nature® Sperm Bank & Fertility Clinic, LLC.
  • West Coast® Sperm Bank, Inc.

9. Discuss with an Agent to Know the Best Insurance Policies for You

In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. Thus, it is imperative to create a budget for insurance policy cover and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your sperm bank business.

Here are some of the basic insurance policy covers that you should consider purchasing if you want to start your own sperm bank business in the United States of America;

  • General insurance
  • Health/Medical insurance
  • Liability insurance
  • Risk Insurance
  • Workers Compensation
  • Building/Property insurance
  • Overhead expense disability insurance
  • Business owner’s policy group insurance

10. Protect your Intellectual Property With Trademark, Copyrights, Patents

If you are considering starting your own sperm bank business, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.

On the other hand, if you just want to protect your company’s logo and other documents or software that are unique to you or even operation concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.

11. Get the Necessary Professional Certification

If you intend starting a sperm bank and any medical related business in the United States of America, you are encouraged to pursue professional certifications; it will go a long way to show your commitment towards the business.

Certification validates your competency and shows that you are highly skilled, committed to your career, and up-to-date in the market. Besides it is almost impossible to run a sperm bank or any medical related business in the United States without the proper professional certification.

In most countries of the world, practicing any medical related practice without a license is illegal. In most jurisdictions, individuals found to be providing medical, nursing or other professional services without the appropriate certification or license may face sanctions including even criminal charges leading to prison.

These are some of the certifications you can work towards achieving if you want to run your own sperm bank and fertility clinic;

  • Board Certified or Fellowship Trained Fertility Specialist
  • ACMPE’s Certified Medical Practice Executive (CMPE)
  • QAPI Certified Professional (QCP)
  • Membership – The American Association of Tissue Banks (AATB) 

12. Get the Necessary Legal Documents You Need to Operate

The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations.

These are some of the basic legal documents that you are expected to have in place if you want to legally run your own sperm bank and fertility clinic in the United States of America;

  • Business and liability insurance
  • Federal Tax Payer’s ID
  • State Permit (e.g. CLIA License)
  • Certificate of Incorporation
  • Business License (Sperm Bank Accreditations and Licenses)
  • Business Plan
  • Health inspection Certificate
  • Copy of license for the service support facility and/or a recent inspection report
  • Employment Agreement (offer letters)
  • Employee’s Handbook
  • Operating Agreement for LLCs
  • Insurance Policy
  • Online Terms of Use (if you have a website)
  • Online Privacy Policy Document (for online payment portal)
  • Company Bylaws
  • Memorandum of Understanding (MoU)
  • Building License

13. Raise the Needed Startup Capital

Starting a standard and well-equipped sperm bank is capital intensive especially even if you choose to launch the business on a medium scale and you only have a handful of full-time employees on your payroll. Leasing a standard facility that can accommodate your patients and staff members and of course the purchase of lab and medical equipment are part of what will consume a large chunk of your startup capital.

So if you choose to start the business on a small scale, you will still have to go and source for fund to finance the business if you are not well of. When it comes to financing a business, one of the first things you should consider is to write a good business plan.

If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business. Here are some of the options you can explore when sourcing for startup capital for your sperm bank business;

  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell of shares to interested investors
  • Applying for Loan from your Bank
  • Pitching your business idea and applying for business grants and seed funding from government, donor organizations and angel investors
  • Source for soft loans from your family members and your friends

14. Choose a Suitable Location for your Business

Starting a sperm bank comes with its own challenges. As a matter of fact, you will need approval from local council and other regulating authorities in the city you intend opening your sperm bank clinic business.

It cannot be overemphasized that the location you chose to start your business is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of appreciable growing population and of course people with the require purchasing power.

Most importantly, before choosing a location for your sperm bank business, ensure that you first conduct a thorough feasibility studies and market survey. The possibility of you coming across similar business that just closed shop in the location you want to open yours can’t be ruled out.

15. Hire Employees for your Technical and Manpower Needs

When it comes to starting a standard sperm bank and fertility clinic, you will need a standard and well – equipped laboratory and other related medical equipment that will aid you in carrying out your job. In setting up a small office for your sperm bank, you will also need a computer, printer, medical related software apps, telephones, pager, photocopier, scanner and fax machine.

When it comes to choosing between renting and leasing a facility for your sperm bank business, the size of the facility you want to own, and your entire budget for the business should influence your choice. Besides, you will need a facility that is in serene environment, a facility that is big enough to accommodate the number of staff member working for you especially if you also run a fertility clinic.

As regards the number of employees that you are expected to kick start the business with, you would need to consider your finance before making the decision. Averagely, when it comes to starting a standard sperm bank with a fertility clinic on a large scale, you would need the services of the following professionals;

Chief Operating Officer/Chief Medical Director (you can occupy this position if you are a medical doctor), Doctors (Fertility Specialists), Lap Technicians, Marketing and Sales Executive (Business Developer), Accountant, Nurse Aides, Human Resources and Admin Manager, Nurses, Customer Services Executive, Security Guards and Cleaners.

Over and above, you would need a minimum of 10 to 15 key staff members to effectively run a medium scale but standard sperm bank and fertility clinic.

The Service Delivery Process of the Business

The service delivery as it relates to sperm bank and fertility clinic is simple and straightforward and it is applicable to players in the hospital and healthcare industry. When a sperm bank and fertility clinic has commenced operations, the administrative staff will be positioned to welcome sperm donors and patients and to sort out registration, payment and card issues.

Once this is done, the sperm donor or patient as the case may be will be directed to see the doctor. If the client is a sperm donor, proper counseling is done and the donor is fully aware of what is expected from him, then the donor is directed to go to the lab for the required test to be sure that the donor is qualified to donate semen before collecting the semen from the donor.

Once the semen is collected after proper screening, the semen is properly labeled, frozen and then stored inside what is known as hydrogen tank and it can be there for several years until a patient who requires semen with the right description comes knocking.

However, some states require a 6-month waiting period for the sperm to be held in a holding tank prior to release. Take for example, a white lady that needs to maintain her race would not want to collect a semen that is donated by a black man.

Usually, if a potential semen buyer (a lady who needs donor-provided sperm to achieve pregnancy) visits a sperm bank, even though the identity of the sperm donor is concealed, they are expected to ask questions like ‘what is the race of the donor?’, ‘how tall is the donor?’ and any question that will help them make informed decision.

Specimens in a laboratory’s bank cannot be released until a second blood test, (done after a 6-month quarantine period) returns negative and proves that no infections were in the blood at the time the specimens were produced.

It is important to state that a sperm bank and fertility clinic business may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated sperm bank and fertility clinic business process is not cast on stone.

16. Write a Marketing Plan Packed with ideas & Strategies

The fact that the entry barrier for starting a small scale sperm bank business is achievable means that there is bound to be more players in the industry no matter the location you choose to start yours. In essence, you must come up with creativity if you must carve out a market for yourself within the available market in your community, city, state or country.

So, when you are drafting your marketing plans and strategies for your sperm bank, make sure that you create a compelling personal and company profile. Aside from your qualifications and experience, it is important to clearly state in practical terms what you have been able to achieve in time past as it relates to this line of business.

This will help boost your chances in the market place when marketing your services. Here are some of the platforms you can utilize to market your sperm bank;

  • Introduce your business by sending introductory letters alongside your brochure to households, hospitals, campus community (getting young and vibrant youth to donate sperm), HMOs, fertility clinics (if you don’t run a fertility clinic alongside your sperm bank) and everyone in and around the location where your sperm bank is located
  • Engage in roadshows in targeted communities from time to time to create awareness on the need to donate sperm and make use of donated sperm as a means of achieving pregnancy
  • Advertise your sperm bank in community based newspapers, local TV and radio stations
  • List your business and products on yellow pages ads  (local directories)
  • Leverage on the internet to promote your sperm bank
  • Engage in direct marketing and sales of your sperm
  • Encourage the use of Word of mouth marketing (referrals)
  • Leverage on the internet to promote your business
  • Engage the services of marketing executives and business developers to carry out direct marketing for you

17. Work Out a Reasonable Pricing for your Services & Products

One key factor that will help you offer your services at the right price is to ensure that you cut operational cost to the barest minimum, and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products.

You can also try as much as possible to work with independent contractors and marketers; it will help you save cost for paying sales and marketing executives. So also, if you are able to secure business partnership with fertility clinics and HMOs as it relates to getting referrals, then you will be able to get the right pricing and of course maximize profits from your sperm bank business.

As regards lab supplies and administrative supplies that you need to effectively run your sperm bank, you need to ensure that you purchase your items directly from the manufacturers or from wholesale distributors in pretty large quantities. The truth is the higher the quantity of items that you purchase directly from the manufacturers or wholesale distributors, the cheaper you tend to get them.

18. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

If your intention of starting a sperm bank business is to grow the business beyond the city where you are going to be operating from to become a national and international brand by opening chains of sperm banks all across various cities in the United States, then you must be ready to spend money on promotion and advertisement of your brand.

No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Here are the platforms you can leverage on to boost your brand awareness and create a corporate identity for your sperm bank business;

  • Place adverts on both print (newspapers and health magazines) and electronic media platforms
  • Leverage on the internet and social media platforms like Instagram, Facebook, Twitter, YouTube, Google + et al to promote your sperm bank
  • Install your billboards in strategic locations all around your city or state
  • Engage in roadshows from time to time in targeted neighborhoods to create awareness of your sperm bank
  • Distribute your fliers and handbills in target areas
  • Advertise your sperm bank in your official website and employ strategies that will help you pull traffic to the site
  • Position your Flexi Banners at strategic positions in the location where your sperm bank is located
  • Ensure that all your staff members wear your branded shirts and all your vehicles and ambulances are well branded with your company logo