The collaborative development of shared understanding is crucial to the success of software development projects. It is also a challenging and volatile process in practice. Small organizations may be especially vulnerable due to reliance on key individuals and insufficient resource to employ several domain specialists. There is, however, minimal empirical research on sharing domain understanding in the context of small software organizations. In this paper we present the results of a field study of commercial software development practice in which we conducted semi-structured interviews with practitioners from ten such organizations. The study provides insights into practices, perceptions, and challenges related to developing shared domain understanding. Our results show that smaller organizations place particular emphasis on the use of prototypes or existing products to refine and verify domain understanding. Furthermore they perceive the biggest challenge to developing shared understanding as the quality of the client representative(s).