Q:

What do you think are the biggest software development issues, in small to medium businesses?

I own a small software development company that developes Web software to other small and medium companies in Chile. The business process is very complex and it is hard to stablish where to put the efforts to make our company better, more efficient, and give better solutions.
I'm also a TI master's degree student and i'm making a paper about this subject, so any help would be great to help my company and my paper. 
I have considered 3 areas for the problems:
1) Software development problems
2) Web development problems
3) Small and Medium companies problems
I don't know about you, but at least this "business formula" in Chile has not received very much support but it is getting better, but today my company is far from being self-sufficient.
UPDATE: Thanks guys for your support so far, i'm updating because i have somewhat enough information so i decided to go deeper within the subjects, wish i would like you to consider for your next answers/commentaries on the subject:
1) Software development problems (3)
1.1 Incomplete problem picture
1.2 Useless delivered software
1.3 Unrealistic or inadequate schedule
2) Web development problems (3)
2.1 Apparently non-viable implementation
2.2 Unefficient module construction design
2.3 Reduced result system inter-operability
3) Small and Medium companies problems (3)
3.1 Very specific, but narrowed requerired system characteristics
3.2 Developed system is not used
3.3 Positivist demand for activities in project execution
There are only 3 problems for category, to deliberately keep a thiner scope. Also, i have considered that it would have been apropiated to separate the third clasification on two, but won't be doing it just now:
3) Small and Medium software developement providers problems
4) Small and Medium software developement clients problems
In that case, i think i would have made the scope of the problem wider and it is not what i want to do now, until at least i'm very trough with the other two clasifications. What you think?

A:

Recovering from the "hero coder" mentality is huge as the company grows. Many small companies want low overhead and don't want a lot of process. They can often achieve a lot very quickly from scratch with few people. Marketing makes crazy promises to customers because they have to and developers pull off feats of hacked-out brilliance at the last minute to save the company.
But then legacy costs and technical debt catch up as the company becomes more entrenched in their market. Progress becomes slower. Much slower. The code is abysmal. The developers are burnt out all the time and bitter. Promises made to customers stop being met. People play the blame game. 
Transitioning out of the knee-jerk, fire-fighting, expecting feats of brilliance culture to one that maintains some semblance of sanity and planning can be a difficult and painful culture shock for small companies.
They say the fast beat the slow but eventually you're worn out from going so fast that you become slower then the slow. Everyone knows the tortoise ultimately beat the hare :)

A:

Regarding the Software Development, In the recent years companies that I have worked with followed Agile development for faster productivity and throughput. 15 minute Scrum meetings works wonders these days and  I initially started off with the traditional Waterfall model for development. 
Regarding the Small,Medium company issue I worked with 2 Start ups in the last year and main problem my company faced was in the reputation aspect because customers look for a good portfolio to see if the company would suit their requirement for the development of their product. We worked hard to build that reputation factor initially Once that issue is past the biggest challenge was to cope up with the current market standards and getting the company compliant with Industry standards. 
Personally i felt i learned a whole lot working on Startup companies and it did provide me a solid base skillset wise. Regarding Web Development Issues i think there would be plenty of gurus here who would give more optimal solutions than I would come up with.
Always Remember Customer is always right !! :)

