Here are the top 3 pitfalls:

Pitfall #1: Don't get a patent too soon

Ed Zimmer of The Entrepreneur Network writes that too many inventors shoot themselves in the foot by patenting a product before they talk to their potential customers. Customers know what they would buy, and you want to know that too before you patent your product. Before you go patenting something that won't sell, talk to your potential customers and develop a saleable design - not one based on an idea that no one will pay for.

Zimmer uses the example of artificial Christmas trees. If you had been the inventor, and asked your potential customers in advance what they thought of your idea, you probably would have heard about issues that had not occurred to you - such as how to make an artificial tree that is easily shipped and stored, and how to make it safer for children. Since you can't patent the idea of an artificial Christmas tree - patents require specific design plans - your tree design would have been very different before you talked to your potential customers, and probably would not have been nearly as marketable.

Pitfall #2: Don't pursue an idea that won't turn an adequate profit

More than 95 percent of all patents never make money for the inventor, because the inventor never takes an objective look at the marketability of the invention, according to the PatentCafe. Marketability does not only mean that many people want to buy your product; it also means you can make enough money on each item you sell to cover your costs and take a sufficient profit.

Marc Moore, president and CEO of Innovative Network Management, says his company decided not to bring an excellent product to the market because they determined that the cost of selling the product was so high that the company could not make enough profit on each item to justify the venture. "In no case should an inventor take on the nearly two years and high costs of pursuing a patent until they really understand how they will make money from it," according to the PatentCafe.

Pitfall #3: Don't proceed without a strong business plan

Venture capitalists read hundreds, and sometimes thousands of business plans a year, and most are poorly written. Most do not mention unfair advantage and sustainable competitive advantage, even though investors consider both critical to the success of a high-tech startup. If you want a good shot at receiving venture capital, make sure your business plan is well written, well researched and comprehensive. Even if you avoid all the pitfalls and find yourself at the helm of a functioning company, you must be sure you don't become one of the 80 percent of businesses that fail in the first five years. Here are the top 12 reasons these businesses fail, ranked by frequency:

1. Inadequate planning - The most common trap for an entrepreneur to fall into is to become so involved in the day-to-day operations of the business that long-range planning, which might point out the need for a change in the business structure, is neglected.

2. Lack of capital.

3. Inexperienced management.

4. Wrong location - The customers are out there, but the business is not convenient because of driving and parking distance, transportation costs, or employee unwillingness to live in the community.

5. Inventory mismanagement - too much of the wrong inventory.

6. Too much capital in fixed assets.

7. Poor credit practices - failure to properly extend and control credit policy and practices.

8. Unplanned expansion - If one location is doing well, a second doesn't mean the business will do twice as well unless management is available.

9. Wrong attitude - Not ready to work longer and harder than ever before; too much money in trappings and appearance.

10. Inadequate records and financial knowledge.

11. Unwillingness to work with a banker, an accountant and a lawyer.

12. Lack of managerial foresight - Failure to build a staff that compensates for the weaknesses of the founder; failure to adequately compensate second-line management.

See Case Study 1, "Lack of Financial Understanding" and Case Study 2, "Under Capitalization" for more indepth reading.

This module will guide you through the ins and outs of starting a business in the United States and help you avoid the pitfalls so that your great idea doesn't have to fall by the wayside because you were sabotaged by the competition, or because you couldn't get funding.