I had an idea for a site a few days ago and went to register the name only to find it taken. I registered a name that was similar by adding a word instead. I checked out the site that had the name I wanted and it wasn't at all the same topic as my plans. Do you think I will lose traffic to this other site since they are more established? I'm thinking that with keyword optimization, my market will still find me in the search engines which is where I'm planning a lot of my traffic generation. Any thoughts?

If they don't have the same topic as you then why would you? Theres bound to be websites that have the same type of name as yours but as long as you do your search engine optimization right, it should be all right.

Well the most you will be killing is brand recognition. Depending on your goals, brand recognition can either be really important, or doesn't matter at all.

You're safe in most aspects, but you have to ask yourself what your goal for your business is, and then act accordingly.

If your products aren't the same, search words should keep them apart enough on top of having different urls. I mean if you search for "happy jack pancakes" and "happy jack car sales" you're bound to not get much overlap in searches.