After ‘soul-searching’, Wharton closes business center where Urban Outfitters, Destination Maternity got their starts

After nearly 40 years of providing free and low-cost support services to thousands of small businesses and entrepreneurs, the Wharton Small Business Development Center is closing at the end of July, confident it is not leaving an unfillable void in Philadelphia but rather freeing up state and federal funding for sister programs at Temple and Widener Universities.

The decision was two years in the making and included a review of the existing small-business support services in Philadelphia, which led to a determination that Wharton, one of the most acclaimed business schools in the world, could be playing a more impactful role in entrepreneurial support, said Karl Ulrich. As vice dean of entrepreneurship and innovation at Wharton, he has oversight of the Wharton SBDC.

“We really did some soul-searching, which was where could Wharton differentiate itself and find a match between its unique capabilities and needs in the world, and we decided supporting small-business starts was not a way we could really differentiate ourselves, not an area where we could contribute better than a lot of wonderful area institutions,” Ulrich said Monday.

Wharton SBDC, one of 18 in the state — and the first — has arguably been the preeminent center, its clients benefiting from the aid of accomplished Ivy League business students and professors.

Long before the city was populated with privately owned incubators for start-ups, Wharton SBDC was the go-to for businesses just getting started, such as Urban Outfitters, Sabre Systems, and Mothers Work, now known as Destination Maternity, said David Thornburgh, who ran the center from 1988 to 1994 and is now president and CEO of the Committee of Seventy, a nonprofit advocacy group.

“A lot of companies owe their success and support and stability to the work we did there,” he said.

That contribution was noted Monday by Ernie Post, state director of Pennsylvania Small Business Development Centers, who received a letter dated July 1 from Ulrich stating that Wharton will close its SBDC effective July 31.

“The program wouldn’t have existed if Wharton hadn’t taken the lead 40 years ago to get the program launched and started in Philadelphia,” Post said.

For participating Wharton students, helping entrepreneurs develop business and marketing plans, overcome strategic challenges, or apply for bank financing was invaluable experience that could not be matched in the classroom. The program, serving 350 to 550 clients with one-to-one training annually and 500 or so more with workshops, according to the state, is a division of the Snider Research Center of Wharton Entrepreneurship. It receives a combined $500,000 a year — from the state Department of Community and Economic Development and the U.S. Small Business Administration.

“Because Penn Wharton Entrepreneurship priorities are not fully aligned with the PA SBDC mission, we would prefer to release our public funding back to the network so that those resources can be deployed at other SBDCs around the commonwealth,” Ulrich wrote.

Temple, in North Philadelphia, and Widener, in Chester, are the SBDCs closest to the University of Pennsylvania. A recent inventory by Wharton revealed about 60 programs in Philadelphia alone, “some focused very narrowly and some overlapping almost completely with what we were doing at the Wharton SBDC,” Ulrich said Monday.

The decision was made to exit the program — which costs the university about $300,000 a year in matching funds, Ulrich said — to focus on what he called evidence-based entrepreneurship, translating literature and evidence on what makes entrepreneurs successful into actionable tools.

Another contributing factor, Ulrich said, was university president Amy Gutmann’s emphasis on life sciences and technology entrepreneurial ventures, the focus at the Pennovation Center, the incubator Penn opened in 2016.

“We’re trying to do what we can do best in support of the entrepreneurial community," he said.

Word of Wharton SBDC’s end didn’t exactly surprise those in the region’s small-business community, but saddened many, including Della Clark, president of the Enterprise Center, a West Philadelphia nonprofit founded by Wharton SBDC in 1989 to prepare minorities for entrepreneurship.

“We wouldn’t exist today if they didn’t have the vision to open up the Enterprise Center,” she said.

Last fall, at Penn’s request, the state SBDC moved its lead office from Wharton SBDC’s facility at 38th and Chestnut Streets, ultimately settling at Kutztown University.

“I knew [Wharton SBDC’s closing] wasn’t going to be long after that,” said Larry Bell, who was a consultant there while a Wharton MBA student in the late 1980s and helped Thornburgh launch the Enterprise Center, where Bell is now chief financial officer.

In an email to Clark Wednesday, Post said, “The best solution for ensuring adequate SBDC services remain in your neighborhood is to provide some of the funding from Wharton to Widener SBDC with the expectation that they maintain outreach offices" in West Philadelphia, perhaps at the Enterprise Center. Clark said she wouldn’t be opposed to that.

On Monday, Post said about 75 percent of the funding originally earmarked for Wharton SBDC will be reallocated to Widener SBDC to expand its footprint beyond Delaware County into Philadelphia.

Lenin Agudo, director of Widener SBDC, said his goal is to partner with existing neighborhood economic development groups in the city.

“It’s a big challenge, but at the same time it’s an opportunity to deliver innovative programming to Philadelphia-area entrepreneurs,” Agudo said.

Also eager to serve would-be Wharton clients is Maura Shenker, director of Temple SBDC for the last year, during which she has been redesigning programs, including expanding services to the Ambler campus and adding incubators.

“I don’t want to sound opportunistic,” Shenker said. “It’s a terrible thing that Wharton SBDC is closing, but I do think Temple is in a great position to help the entrepreneurial ecosystem and support the businesses that Wharton supported.”

Staff writer Sam Wood contributed to this article.