Entrepreneurship in Islam

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Introduction

• Entrepreneurship is a part of Islamic culture. According to Prophet Muhammad and his companions," there are a lot of Muslims that are successful entrepreneurs in the world and Islam always invite all Muslims to be innovative, entrepreneur and active.
• Entrepreneurship is a strategic area which has always been attentive and always changing over time.
• For Muslims, entrepreneurship have played a vital role in the formation of Islamic civilization from the time of the Prophet again.
• Entrepreneurship or better known as an area of ​​their business in particular Muslims in early Islam, but not immune to the Prophet himself.
• An entrepreneur‟s behaviour is bound by sharia or the Islamic law. The conduct of a Muslim entrepreneur is different from the non Muslim counterpart as his or her main objective of involving in business is to be submissive to Allah, the Almighty God in every single action taken in business transaction.

Islamic Entrepreneurship

• Entrepreneurship is an integral parts of Islamic religion.
• The Muslim entrepreneurs are "khalifah" and have the responsibilities to develop prosperity and sees business as part of "ibadah" or good deed.
• In Islam, the activity also known as Ibadah –or good deed.
• Position of Entrepreneurship and business in Islam - encouraged to venture into business. Prophet Muhammad SAW expounded that 9 out 10 sources of sustenance are through business.
• Islamic Economic System - Islamic Entrepreneurship should operate within the domain of Islamic Economic system and act as the vehicle towards global acceptance of Islamic Economic System.
• Guiding Principles of Islamic Entrepreneurship is by the al-Quran and al-Hadith.
• Entrepreneurial Ethics based on exemplary conducts of Prophet Muhammad SAW.

M. A. Abdullah & A. Hoetoro (2011) said “Islam does support every Muslim entrepreneur to have an appropriate vision that directs his/her enterprise to triumph over business competition within the globalization era.”

“Thee do we worship, and Thine aid we seek, show us the straight way” (Surah al- Fatihah: 5-6)

Allah said in Qur'an:
Al- Talaq: 3
Al-A'raf: 157
Al- Baqarah: 177
Al- Zukhruf: 32


Principles of Islamic Business

• Freedom
• Transaction without riba
• Fair
• Good services
• Protecting the right of sellers and buyers
• Honest and trust
• Hard working

Concept of Islamic Business

• Exchange goods with goods or money
• The purpose of making a profit
• Valid contract terms in shariah
• Mutual agreement between the seller and buyer

Basic concepts, systems and business processes

• Honesty in dealing the business
• Mutual respect and esteem
• Satisfying all business obligations
• Lawful earning (Halal)
• Humanity in business contacts
• Priority and sharing behaviour

Characteristics of Islamic Entrepreneurs

• Praying five times a day
• Concerned with the provision of halal
• Always true
• Prioritizing user rights
• Fulfill zakat
• Always be grateful
• Always repent
• Keep good relations with humans
• Render a service
• Helping other entrepreneurs
• Staying away from vices
• No sabotage
• Pay loan

Function of Business in Islam

Production

• A process of converting input (production resourcess) into finished goods or semi finished goods.
• Services are also considered as a product. any preparation of services are considered as a production.
• Involves planning, staffing, directing and controlling all activities related to the production of goods and services.

Marketing

• Marketing is a system of business activities designed to plan and execute the conception, pricing, promotion and distribution of products (including goods, services, organizations, people, places and ideas) to encourage a change that could meet the needs of consumers and at the same time achieving organizational objectives.

Financial

• Financial management involves the individual financial, business or non- business organizations, government and non-governmental organizations and all entities involved with money.
• Financial functions within a business including forecasting funding needs, raise funds for the company, managing funds and make sure the fund is used in the best way.

Human resources

• Human resources of an organization is a staff that includes employee and manager in the organization.
• They offer talent, knowledge, skills and experience to the organization. Without human resource organization not only can‟t move but it will not exist.

The types of Business

Proprietorship

• Owned by individuals.
• Need a small capital.
• For examples:- proprietorship in Islam must follow the rules of Islamic principal such as should not deal with haram products (alcohol,wine,pork) also not gambling,not cheating,not lying.

Partnership

• Is a business run by one, two or more of the owner in the profit.
• You and your partner is co-owner’s and they will share profit or risk distrubution.
• In Islamic partnership, if the partner borrows money to the third party, which exceeds his capital, and he commits for external loans, his liabilities are unlimited mudarabah.
• Is a relationship held by two or more in which one party acts as a supplier and the other runs the firms on behalf of them.
• Division of the rate of profits based on an agreement which involves one party called ‘proprietor’ who supply capital to the firms, and the other called ‘entrepreneur,’ (Khan, 1992, p.216) who accept the capital and run the business.

Challenges and Business Prospects in Islam

There are many challenges in business:
1) Corruption is the acts prohibited in Islam because it cause hostility and fighting among ourselves in get a services that are offered by some party. The rich will get richer and the poor are poorer.
2) There are elements of fraud either from the buyer, the seller or the goods sales in terms of measurement. For examples: sell a good that did not own and nowadays in business there a way to hide other payments that are not described or explained to the customer during transactions.
3) Gharar ( a sale that involves uncertainty) For examples: sale of fish and birds that have not been arrested or shown to the buyer by the seller.

• In Islamic business, ‘riba’ is not allowed. Therefore there will no bias in the community which will cause the rich become richer and the poor become poorer. Islamic business is based on Shariah Principle.
• Government offer opportunity for entrepreneur to expand their business with finding fun especially in term of financial lending.
• For example, government agencies that involve in helping entrepreneur such as Amanah Ikhtiar Malaysia (AIM), Perbadanan Nasional Berhad (PNB) and others.

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