Mary Beth Cox thought this winter she would have to scuttle her 8-year-old business, The Ship's Hatch, a nautical-motif specialty store in Fairfax.

Her sales were down 8 percent in the first quarter of 1982, compared with first-quarter sales a year earlier. Her profits were off 15 percent, and her bills were mounting.

"I got into a bind," Cox recalled. "I suddenly realized that my bills were accumulating and that my sales were off incredibly."

Small businesses--particularly sole proprietorships such as The Ship's Hatch--often exercise one of several options upon reaching that critical point:

They seek bank loans, often short-term notes pegged to high interest rates.

They liquidate--sell their inventories, pay off their debts and close their doors, which is a salvaging operation designed to save more dignity than capital assets.

They file for bankruptcy.

In February, when customers stopped coming into her store to buy the genuine Liberty Ship hatchcovers that can be turned into tables, benches and bar tops, Cox considered applying for a loan at Virginia National Bank.

She thought she might use her inventory of unfinished hatchcovers, finished hatchcover furniture and other nautical artifacts such as Chelsea clocks, as collateral. But she said further consideration led her to scrap the idea.

"Bankers don't like to accept inventories as collateral," Cox said. "They say, 'If you can't sell it, what makes you think we can?' "

Cox then considered liquidation. But the idea of closing what had begun as a hobby and had grown into a modestly profitable concern saddened her, she said.

"This is my store. I didn't want to lose it," Cox said. But she was sinking fast.

Finally, Cox pulled out a Ship's Hatch customer mailing list and decided to have a sale. She sent postcards to about 500 people, announcing that she was taking 20 percent to 50 percent off the price of everything in the store. She also offered free nautical key chains, many of them made of solid brass, as sales inducements.

About 50 former customers answered the postcards, Cox said. And 10 of those customers purchased finished hatchcover tables at prices ranging from $300 to $350 each. Those sales, coupled with a serendipitous visit of two new customers who spent a total of $2,000, were enough to help Cox stay afloat.

The turnabout also taught her a financial lesson.

"If I had gotten a bank loan, I would have dug myself into a deeper hole. I made almost as much money off the sale as I would have gotten from the bank, and I didn't have to pay an interest rate," Cox said.

But the recession--which has helped bankrupt about 1,031 businesses in Eastern Virginia, Maryland and the District of Columbia this year--is lingering. Sales at specialty stores, such as The Ship's Hatch, have continued to suffer through the first and second quarters of this year. It wasn't long before Cox found herself in another bind.

"I understood what was happening," said Cox. "I don't go into stores myself, nowadays. When I see sales flyers, I throw them in the trash. I don't want to spend any money myself. I understand how other people feel."

Cox decided to have another sale in May anyway. And it worked.

"At times like this, you have to be creative," Cox said. "You have to give people a reason to buy. You have to give rebates to get people in.

"If nobody is coming in, there's no profit. If they are coming in for sales, you are reducing the profit, but at least you are bringing in enough money to pay off some bills," she said.

Cox netted about $10,000 last year, compared with a break-even showing in 1980. She said she may "suffer a slight loss" or, at best, come out even in 1982.

But if conditions worsen, Cox said she will follow the route taken by most small businesses in trouble--according to the Washington-based National Federation of Independent Business, which represents 500,000 mostly small businesses across the country.

"I will liquidate," she said.

"You hear economists telling small business people to just hang on, because things will get better. But small businesses who follow that advice, who just hang on and on, could be making a mistake. They take out loans to keep going . . . and they get deeper into the quicksand. Suddenly, they're in over their heads and they're filing for bankruptcy."

She said her "personal feeling" is that filing for bankruptcy--declaring insolvency and asking creditors for total or partial forgiveness of debts--"would be irresponsible."

"I believe you put yourself under an onus when you seek bankruptcy," Cox said. "I'd rather liquidate, sell off my inventory, cut my losses, get out and come back again when things improve."

But, having survived two tight squeezes, she believes she'll be able to keep her doors open. Her shop has little overhead, thanks to friends and relatives who help her run the place.

And her early, self-avowed commitment to spend as much time with her family as she does with her business seems to have paid off in economic terms, Cox said.

"I didn't expand my business. If I had expanded when I could have, I would have twice as much to lose today."

Cox's husband, Tom, is a federal employe. She has other family members who have their own businesses. And in that regard, perhaps, she has a cushion not available to other struggling, small proprietors.

But, as Cox points out, her business is her business. And the experience of running her business has provided another invaluable lesson, Cox said.

"The next time I see a severe recession coming, I'm going to recognize it," she said. "Unless you experience working in a severe recession, you don't know that you should be afraid of it, because you don't know what it can do. I know, now."