14 Key Principles of Business in Islam

Principles of Business in the Quran and Hadith

Allah SWT has stated the lawfulness of the business in the Quran. The Islamic principles of business in the Quran and Hadith emphasize honesty, fairness, and integrity in all transactions. The Quran encourages trade and economic activity but stresses the importance of avoiding deceit, fraud, and exploitation. Fair dealing, mutual consent, and transparency are core principles of business in Islam, as highlighted in the following verses of the Quran and Hadith:

Principles of Business in the Quran

Principles of Business in Hadith

Prophet Muhammad (ﷺ) admired honesty and loyalty in Muslim merchants. He said:

14 Key Principles of Business in Islam

Muslims should apply Islamic principles in their businesses to keep the country’s economy active. By implementing these principles, commodity prices will be reduced, corporate syndicates will be diminished, and customers’ purchasing competence will develop. These principles are:

1. Be Objective with Positive Intentions

According to this principle, always keep your intentions right. According to Shariah, people’s actions are bestowing to their intentions, and they would get what they intend.

2. Make Wealth to Seek Allah’s Blessing

Wealth is a gift from Allah SWT. Whenever Allah endows you with wealth do not be extravagant and try to seek Allah’s blessing and end up in Jannah. Also, do not be miserliness that leads to punishment and ends up in hell.

3. Wealth is Satisfaction within the Heart

Wealth is not only the abundance of money and other possessions. According to Islamic principles, true wealth is satisfaction and happiness within the heart. Prophet Muhammad (ﷺ) explained that whoever is prosperous in his heart will not be hurt no matter what he has in this world, and whoever is poor in his heart will not be pleased although he has everything in this world.

4. Keep Tawakul on Allah

People are categorized into three classes by tawakul (reliance upon Allah).

• First, depend upon Allah without efforts to achieve their objectives.
• Second, depend upon their efforts without Allah’s help.
• Third, depend upon Allah after placing their efforts to achieve their objectives.

The third category is the best as the Prophet Muhammad (ﷺ) said: If you depend on Allah with trust, He will provide you endowment as He provides it to birds that venture out hungry in the morning and back with full bellies at nightfall.

5. Transparency and Fair Dealing

Islam prohibits cheating, manipulation, and fraud. Sellers are required to clearly disclose product conditions, especially defects. Withholding such information is a major sin.

It is a major principle of business for Muslims that their agreements and trades must be honored and transparent. It maintains long-term relationships that depend on communal respect in Islamic society.

6. Avoidance of Deception and Intention to Cheat

Intention plays a vital role in Islam. Business must be conducted with sincerity, and any form of trickery, even at the intention level, is discouraged.

7. Neither Devour nor Deceive

In Islam, it is strictly forbidden to consume others’ wealth through dishonesty or cheating. It is also unlawful to make fake promises to the client about the product’s price, cost, quality, etc. Businessmen should focus on their exchanges with clients. In a partnership, the partner’s accountability is to return a reasonable share to others.

8. Exclude Riba (Interest) from Transactions

Riba (interest) is strictly forbidden in Islam. Muslims should gain their profits through Halal trades, deals, or partnerships where stakeholders share rewards and risks equally. There are many ways to fund businesses, such as Sharia-compliant profit-sharing agreements, but loans with riba are devoid of Allah’s blessing.

9. Corruption Less Practices

It is forbidden to trick others during transactions. This can be done in many ways, such as secreting faults in front of buyers until the sale is finalized or weighing a minimum amount. Allah forbids Muslims from practicing such actions. So, they must certify that their goods are the proper size and weight and are faultless.

10. Halal Trade and Investments

Islam inspires investments in businesses that build society. Therefore, sectors such as alcohol, gambling, haram food, or unethical dealings are prohibited. Always invest in lawful actions that endorse ethical practices like ventures in lawful food, healthcare, or education. Muslims should be aware of their sources of wealth because they will be questioned about how they got the money and where they spent it.

11. Don’t Perform Double Dealing

According to this principle, mixing bad and good, selling false goods, low-quality products at higher amounts, and so on, are prohibited. Nowadays, in every society, everything is rebranded to look attractive. It is not forbidden in Islam if it is not for deception.

12. Honesty and Trustworthiness (Ṣidq and Amānah)

Honesty in every field of life is considered a key to success. Muslims believe that truthfulness neither increases nor decreases transactions but gives barakah in wealth. It is prohibited to veil the truth for surging profit and persuading a buyer to buy something through fake information. Moreover, Prophet Muhammad (ﷺ) categorized lying as one of the features of a hypocrite.

13. Return Faulty Goods

Nowadays, in each store, it is written that “Sold items are not returnable”, even for defective items they specify the time frame. Prophet Muhammad (ﷺ) defined the rule for the purchased items: that everyone has three nights to decide whether to keep the purchased item or return it.

14. Condemn Hoarding

It is not prohibited in Islam to store food items, create a market crisis, and resell that product at higher prices. It is the defilement of the business principles of Islam.

Final Worlds

According to the teachings of Islam, the best way to produce income and start your business is early in the morning with your efforts. Islamic finance education, grounded in the principles of business in Islam, is thoroughly explained in AIMS’ Islamic finance certification and diploma of Islamic banking and finance programs. These programs lead to the globally accredited Islamic banking and finance Master and PhD Islamic Economics and Finance degree programs.