diff --git a/Makefile b/Makefile
index 1fb3d0f..f88ff77 100644
--- a/Makefile
+++ b/Makefile
@@ -1,3 +1,7 @@
+# loading and exporting all env vars from .env file automatically
+include .env
+export $(shell sed 's/=.*//' .env)
+
 APP_NAME="python-boilerplate-project"
 IMAGE_NAME="python-boilerplate-project"
 VERSION="latest"
@@ -35,7 +39,7 @@ docker/down:
 	docker-compose down --remove-orphans
 
 docker/test:
-	docker-compose run ${APP_NAME} poetry run pytest --cov-report=html --cov-report=term --cov .
+	PYTHONPATH='.' docker-compose run ${APP_NAME} poetry run pytest --cov-report=html --cov-report=term --cov .
 
 docker/lint:
 	docker-compose run ${APP_NAME} poetry run ruff check .
diff --git a/README.md b/README.md
index 63ac5e5..d444827 100644
--- a/README.md
+++ b/README.md
@@ -20,7 +20,8 @@ A python boilerplate project using poetry
 
 Variable | Description | Available Values | Default Value | Required
 --- | --- | --- | --- | ---
-ENV | The application enviroment |  `dev / test / qa / prod` | `dev` | Yes
+ENV | The application enviroment | `dev / test / qa / prod` | `dev` | Yes
+PYTHONPATH | Provides guidance to the Python interpreter about where to find libraries and applications | [ref](https://docs.python.org/3/using/cmdline.html#envvar-PYTHONPATH) | `.` | Yes
 
 *Note: When you run the install command (using docker or locally), a .env file will be created automatically based on [env.template](env.template)*
 
diff --git a/env.template b/env.template
index d8f5281..b7bb1cb 100644
--- a/env.template
+++ b/env.template
@@ -1 +1,2 @@
-ENV=dev
\ No newline at end of file
+ENV=dev
+PYTHONPATH=.
\ No newline at end of file
diff --git a/pyproject.toml b/pyproject.toml
index ba5fabb..3ded99e 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -9,7 +9,7 @@ license = "MIT"
 python = "^3.11"
 
 [tool.poetry.dev-dependencies]
-pytest = "7.4.4"
+pytest = "^8.0.0"
 pytest-cov = "^4.1.0"
 ruff = "^0.1.6"