Muslim Business Ethics Taught By Prophet Muhammad SAWS

Prophet Muhammad SAW is our role model in life, and certainly, we can learn a lot about business ethics through his teachings.

In this article, We want to discuss these business ethics and how we can use them to ensure we represent appropriate Islamic ethics in every transaction.

The Prophet, peace and blessings be upon him, was asked, “What is the best earning?” The Prophet said, “It is an honest sale or a man’s work with his hands.”

– Musnad Aḥmad 15523
Sahih li ghayrihi (authentic due to external evidence) according to Al-Albani

So trade is valued in Islam and it’s something that is taught to us through our prophet but how do we conduct honest trading as Muslim entrepreneurs?

We will explore three areas of business in order to answer this question.

Area #1: Employment

So what did the prophet ﷺ teach us about employing other people, treating our employees, and how we interact with our team members?

Abu Hurairah (May Allah be pleased with him) reported: The Prophet (ﷺ) said, “Allah, the Exalted, says: ‘I will contend on the Day of Resurrection against three (types of) people: One who makes a covenant in My Name and then breaks it; one who sells a free man as a slave and devours his price; and one who hires a workman and having taken full work from him, does not pay him his wages.”‘

-Sahih al-Bukhari

Paying wages to your employees and making sure that you pay on time is an extremely important tenant that we were taught in Islam.

When we hire employees to help us in our business we are establishing a contract with them with Allah ﷻ as the witness and so it’s important to give them their due wages and their rights despite any disputes that may occur.

Area #2: Selling

The second thing that you want to keep in mind when you’re conducting business as a Muslim is selling.

Allah’s Messenger (ﷺ) said, “It is required for the vendor to tell the buyer of any defects of which he is aware”.

-Ibn Hanbal Hadith Collection

If we reflect on this hadith we’d understand that making profits isn’t the main motive when it comes to selling in Islam. Surely it’s important, but the benefit of people comes first, so if you are aware that a product is faulty with defects then you shouldn’t sell it to anyone unless you let them know first.

It is common to see that especially when selling used cars the sellers are always trying to hide the defects, some would even take pride in selling a car with defects at a higher price than it should be, this goes against our Islamic ethics and certainly against the sunnah of our beloved prophet ﷺ.

So it’s important for us as Muslims that we tell the buyers of any defects of which we are aware to conduct business and trade ethically.

The Holy Prophet (ﷺ) said, “A merchant who hoards goods in order to raise their price is a sinner.”

– Muslim Hadith Collection

Some people might not be aware of this, but hoarding products to be the sole provider and have a monopoly of the market is actually a sin in Islam, so this is another thing that you should watch out for to conduct business ethically.

So don’t try to monopolize a sector of the market so you can control the price or have people pay extra because you are the only provider.

Area #3: Buying

The third area of business that you want to pay attention to as a Muslim entrepreneur is going to be buying, specifically what you need to keep in mind when buying and when dealing with vendors & suppliers.

Narrated Jabir bin `Abdullah, Allah’s Messenger (ﷺ) said, “May Allah’s mercy be on him who is lenient in his buying, selling, and in demanding back his money.”

-Sahih al-Bukhari

Showing kindness is an important Islamic value and there’s no exception in doing so when conducting business.

Here are some things we should watch out for when buying.

  • Make sure you are serious about buying before reaching out to sellers.

You want to avoid reaching out to someone who’s selling a product or service unless you’re really serious about buying to respect their time.

You don’t want to waste anyone’s time and make them feel like they have an opportunity that they actually don’t have, so only reach out to someone if you’re actually serious about doing business with them.

  • Avoid raising your voice when negotiating

If you’re negotiating when you’re buying a product or service avoid raising your voice and avoid getting into a dispute.

Negotiating is perfectly fine and might even be an essential part of business, but there are guidelines that we should stick by as Muslims.

  • Avoid trying to lower the price to an unreasonable amount

We all love a great discount but you want to make sure that you’re not pressuring the seller to reduce the price to an amount that becomes unfair for them and for their business, so you want to make sure that the deal makes sense on both ends.

When we follow these principles when we are employing, selling, and buying then we are truly reflecting the values and ethics of Islam taught to us by the Prophet (ﷺ) and by Allah SWT. 

So it’s important as Muslim entrepreneurs to make sure that we conduct our businesses ethically so that we get closer to Allah SWT and hope for his Barakah to be present in our business and to ease our transactions and grant us Rizq (Sustenance).

So to sum up, here are the points that we covered:

  • Employing: Make sure you give your employees their due and treat them fairly.
  • Selling: Sell ethically by keeping the buyer’s well-being in mind, don’t sell them anything with a defect unless they are aware of it, and don’t hoard in order to raise the price.
  • Buying: Make sure you are serious about buying before reaching out to sellers, avoid raising your voice when negotiating, avoid trying to lower the price to an unreasonable amount.

Written by Abby El-Asmar

Abby is a business & marketing consultant – and the founder of Ummahpreneur. His passion is to nurture a new generation of Muslim entrepreneurs that will impact the world in a positive way while uplifting the Ummah!

July 6, 2021

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