diff --git a/README.md b/README.md
index 6de0db9..fe85ca7 100644
--- a/README.md
+++ b/README.md
@@ -87,19 +87,13 @@ cd RedFlag
 # Build agent (one-time)
 cd aggregator-agent && go mod tidy && go build -o redflag-agent cmd/agent/main.go && cd ..
 
-# Start database and server
+# Start database and server (auto-configures on first run)
 docker-compose up -d
 
-# Setup server (one-time)
-docker-compose exec server ./redflag-server --setup
+# Watch setup progress (optional)
+docker-compose logs -f server
 
-# Run database migrations
-docker-compose exec server ./redflag-server --migrate
-
-# Restart server with configuration
-docker-compose restart server
-
-# Access: http://localhost:8080
+# When setup is complete, access: http://localhost:8080
 # Admin: http://localhost:8080/admin
 ```
 
diff --git a/docker-compose.yml b/docker-compose.yml
index 50226f6..99bbb4f 100644
--- a/docker-compose.yml
+++ b/docker-compose.yml
@@ -1,5 +1,3 @@
-version: '3.8'
-
 services:
   postgres:
     image: postgres:16-alpine
@@ -41,6 +39,7 @@ services:
       - REDFLAG_DB_PASSWORD=redflag
       - REDFLAG_SERVER_HOST=0.0.0.0
       - REDFLAG_SERVER_PORT=8080
+    command: ["sh", "-c", "if [ ! -f /app/.env ]; then ./redflag-server --setup; fi && ./redflag-server --migrate && ./redflag-server"]
     restart: unless-stopped
 
 volumes: