diff --git a/README.md b/README.md
index cd7c39a..fc954f8 100644
--- a/README.md
+++ b/README.md
@@ -22,8 +22,15 @@ This is the backend server for a web application for tracking the placement acti
     ```sh
     npm install
     ```
+2. Create a `.env` file in the root directory of the project, and add the following environment variables:
+    ```env
+    DB_HOST=<your-database-host>
+    DB_USER=<your-database-user>
+    DB_PASSWORD=<your-database-password>
+    DB_NAME=<your-database-name>
+    ```
 
-2. Run the App in Development Mode
+3. Run the App in Development Mode
     ```sh
     npm start
     ```