THIS IS how big plans can go up in smoke.

Alex Marshall and Brenda Cox (not their real names) have a graphic design firm. The firm, in fact, belongs to Marshall. Cox is the employe.

Before the fire, they worked in an office downtown on 15th Street. There are plenty of offices downtown and plenty of people work in them. But like a lot of other Washingtonians, Marshall and Cox longed to work somewhere more personal, somewhere they could call their own.

Like a lot of other Washingtonians, Marshall one day decided to buy a townhouse and he did. He bought one on 11th Street, in the area known as Logan Circle East. He bought it for around $65,000, Cox recalls. Over the months while it was being restored, he poured another $50,000 or so into it.

Around the beginning of December, three days after work on the house was finished, Cox and Marshall moved their business to its new home. They moved the files and the desks and the typewriters and the drafting tables and they began to work.

They brought two other things. The furnace, though it was on, had not been on long enough to heat the house, and Cox and Marshall felt the cold. They brought two space heaters.

This is how Cox remembers what happened:

"Often we use a rubber-cement thinner to clean up art work. I had just finished a job, and I was getting ready to give it to the customer so I was going to clean it.

"I had walked away from my table with the can of thinner, which was full, and poured a little on a paper napkin. I was probably six feet away from the space heater, an electric radiating one. Suddenly I heard a spark sound like the sound you hear when you throw water into a hot skillet.

"I turned around and there were sparks and flames coming out of the coil area of the space heater. Then the carpet in front of me started to flame in different spots, and I tried to put those out with my foot. But as soon as I put one out, another one would start.

"I still had the can of thinner in my hand. When I looked at it, flames were coming out of the spout.

Cox and marshall beat the flames with a coat and a towel, but they were driven back. When they finally realized the fire was beyond their control, they went outside to wait for the fire department and watched the place burn up.

When it was all over, the house and the business were gutted.

"You'd never think a space heater would give off that much heat," says Cox. "It's not like a fireplace. You don't see any flames."

In fact, the coils you see glowing bright red when you plug in your eletric space heater reach temperatures of up to 1,300 degress Fahrenheit. Besides thinner and other flammable liquids, they can ignite many fabrics that approach to near.

Paul Sawin, a spokesman for the National Fire Protection Association, regards the devices as relatively safe. "As long as they're not plugged into an overloaded circuit," said Sawin, "there should be no problem with them."

Nevertheless, space heaters cause hundreds of fires each year. In 1978, the 15 states the report fires to the U.S. Fire administration's recorded more the 2,000 fires and more than 60 deaths caused by space heaters. Nearly 1,000 involved eletric space heaters, 327 of them portable.

The Consumer Product Safety Commission estimates more than 4,500 persons reported to hospital emergency rooms in 1978 with injuries caused by different kinds of space heaters, both stationary and portable. Nearly 3,000 of those associated with gas space heaters; approximately 1,500 with electric.

An engineer with Underwriters Laboratories, which certifies electric space heaters for safety, said: "We really feel our methods of testing them leave something to be desired, and we're are in the process of updating them."

The test UL uses to determine how readily they will ignite fabrics consists of wrapping the devices in cheesecloth. Said the UL engineer: "There are many fabrics more flammable than cheesecloth."

There also have been numerous accidents with heaters that use kerosene. As a result, the CPSC is considering a petition to ban their use. And because of more than 70 deaths attributed to carbon monoxide poisoning and asphyxiation from the use of unvented gas space heaters, the commission recently voted to require that all such heaters have a mechanism that would automatically turn them off when carbon monoxide in the room reached a hazardous level.

All of which should serve as a warning to consumers that space heaters can be dangerous, especially if used improperly.

Be sure the space heater you buy is certified by a recognized testing organization, such as Underwriters Laboratories or the American Gas Association. UL approval requires, for instance, that protable heaters switch off automatically if tipped over.

All such devices should have a protective grid in front of flames or radiating coils to prevent contact with humans or furnishings.

Keep heaters well away from curtains and furniture. Furnishings needn't touch a radiating heat source in order to ignite.

Take care with eletric heaters around water. Heaters perched on the bathtub sill may be a source of cold weather pleasure, but they are equally able to electrocute once they join you in the bubble bath.

Do not use combustible liquids or sprays near space heaters. Even fumes can start a potentially deadly fire.