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The desire for independence, and to exploit opportunities, financial incentives, redundancy, and reduce unemployment are some of the major push and pull factors that have led to the formation of new businesses in Imo State of Nigeria. The fulfillment of the above desires is now being constrained by hash and inconsistent government policies. The purpose of this study is to examine how government regulations have affected the establishment of new businesses in the beverage industry (Pure Water Firms) in Owerri metropolis. A sample size of 310 was determined using the Taro Yammeh formula from a population of 1425 made up of staff of newly established firms in Imo State. Regression and correlation analysis was used for data analyses. Findings from the study disclosed that high statutory fees and bureaucratic bottlenecks have a significant effect on the formation and managing of new businesses in Imo State. The study, therefore, recommends among others that government should reduce the various costs associated with registration and issuance of licenses in order to encourage new entrepreneurial business formation.