There are lots of options when it comes to Halal business models, which makes it confusing for many people. That’s why in this article we want to share with you the pros and cons of some Halal business models so you can decide which one suits you best!

#1: E-commerce

E-commerce is undoubtedly on the rise. Fuelled by the pandemic, the e-commerce sector saw a dramatic rise in its share of all retail sales, from 16% to 19% in 2020.

Pros

• Doesn’t require lots of human interaction: E-commerce allows you to build your brand online, this allows you to run your business without necessarily being the face of the brand.
• Rapidly scalable: The more products you sell, the more your business will grow. This makes e-commerce a great business because it can be scaled rapidly.

Cons

• Requires a lot of money: Building an e-commerce store can be relatively inexpensive, however, there are lots of expenses that should be taken into account like paying for materials if you are going to make the product yourself or paying a supplier to do it for you, then there are the marketing & ads expenses which are essential to reach your customers.
• Requires tech skills: If you want to build an e-commerce store you would either have to pay someone to build it for you, or you would need to build it yourself which would require you to have some tech skills.
• Low profit margins: With all of the costs adding up, the profit margins of e-commerce can be quite low depending on the product, but generally, you’d need to generate a high amount of sales in order to make a significant profit.

To sum up, e-commerce is a great business model for those who are tech-savvy because a very important part of it is building an aesthetically pleasing website that attracts customers. As well as for people who are comfortable in their ability to market the brand and run ads to generate sales.

#2: Affiliate Marketing

Affiliate marketing is a halal business model because you are selling someone’s products or services in exchange for a commission.

Pros: 

• You don’t have to build the business from scratch: Doing affiliate marketing saves you the trouble of having to manage the business. This includes dealing with customer complaints, refunds, and shipping.

Cons:

• It requires marketing and sales knowledge: You will need to have sufficient marketing and sales knowledge that would allow you to generate sales. 
• Low profit margins: The commission that the company provides is usually a small part of the profit. This means you’d need to make many sales in order to be profitable.

#3: Building A Software or An App

Pros:

• Easy to scale: Whether your App has 10 users or 100, the work you are doing is generally the same. This makes it easier to grow the business.
• It provides a monthly recurring revenue: For most Software services like Amazon Prime, and Spotify, you are usually paying a monthly subscription. So if you are offering a software as a service (SAAS) you can charge your clients a monthly fee, which secures a monthly recurring revenue.

Cons:

• You need to be knowledgeable in tech: Building an App requires knowledge in app development. It’s true that you don’t necessarily need to build the app yourself but then you would need to hire someone to build it for you which can be expensive.
• Needs large capital: Hiring app developers isn’t the only costly aspect when it comes to building an app. You would also need to spend money to acquire users by marketing the software or the app.
• Low profit margins: Monthly fees are usually $10-$20 a month, this means that you need to have a high amount users before the Software becomes profitable.

#4: Service-based Business

Pros: 

• Easy to start and set-up: Compared to the other business models, this one is the easiest to start. The reason why is because you only need a service that you can offer and clients who are willing to pay for it. 
• High profit margins: Because the expenses of offering a service are minimal aside from your time, almost all of the money you make goes straight to your profits.

Cons:

• It requires human interaction:  Because you have to sell your services, you have to be okay talking to other people, dealing with your clients, and being the face of your brand.
• It requires building a personal brand: As a service provider, you represent your brand because you need your clients to trust you in order to do business with you.

Out of these 4 business models we mentioned, the Service-based business model is the one we recommend for beginners who want to start their own halal online business because it requires almost no upfront capital and no business experience. With this business model, you can start generating profits as soon as you create an enticing offer for your clients.

For Professional Muslim

If you’re a professional Muslim who wants to build a 6-figure halal online business that gives you freedom, income, & impact, then watch this free masterclass 👇.