scared 10 month pup

Question
I have a 10 month old hinez 57 (I think collie/sheppard mix,) which I've had for 8 months, who is deathly afraid of anyone other than my partner or I. We have 3 other dogs and 3 cats, and for the most part they all get along just fine. She does get a little picked on by the sheppard, which I belive she is trying to establish her dominance with, since our eldest dog (a rot) is on her last leg, and won't be around much longer.  anytime we have friends over or anyone other than us around she runs, hides and cowards down to them, and sometimes pees right where she is, not much but a little puddle. A couple of times she has kinda nipped at kids too. She's never made contact, but sort of nips at them when they come close to her, not even petting her. I'm just scared now to let her around any kids under the age of 8 or so. Not knowing how she'll react to them. What can I do to break her of being so scared all the time? I know she gets plenty of love and attention, but what has caused her to be like this?

Thanks!

Answer
It sounds like poor early socialization combined with the suspicion of strangers common in herding breeds.  How much exposure to strangers and children do you thing she had before the age of 12 weeks?  A lack of it could cause the very problems you describe.  Such early damage is hard to undo later.  

What can you do?  First provide strong leadership.  Build her confidence.  Bribe her.

The key to most behavior problems is approaching things using the dog's natural instincts.  Dogs see all the people and dogs in the household as a pack with each having their own rank in the pack and a top dog.  Life is much easier if the 2 legged pack members outrank the 4 legged ones.  You can learn to play the role of top dog by reading some books or going to a good obedience class. A good obedience class or book is about you being top dog, not about rewarding standard commands with a treat. Start at http://www.dogsbestfriend.com/  If you are her leader, it is up to you to protect her from strangers.  She doesn't have to show submission by urinating.

Many dogs eventually outgrow submissive wetting, but you can reduce it by building the dog's confidence up.  Start with obedience training.  As you praise the dog for following your commands, it will build its confidence.  

Play tug of war with the dog and lose.  However at the end of the game, take the rope or toy and put it up, less the dog becomes confused about who is top dog.
Ropes from the pets' store quickly turn to hazardous shreds.   Ones I made
lasted much better.   Go to a hardware or home center that sells rope by the
foot.  Buy 2' of 3/4" poly rope.   Melt the ends, and tie  knots in it.   Get
them as tight as possible, put it in a vise and pound it with a hammer.  Watch
carefully, and be ready to discard when it comes apart.

Finally, make sure it has a den to live in.  If you are not using a crate, buy one.  The dog may be happier in its den than loose in the house.  It relaxes, it feels safe in its den.  It rests, the body slows down reducing the need for water and relieving its self.  Dogs that have been crated all along do very well.  Many of them will rest in their crates even when the door is open.  I think the plastic
ones give the dog more of a safe, enclosed den feeling.  Metal ones can be put
in a corner or covered with something the dog can't pull in and chew.  Select
a crate just big enough for the full grown dog to stretch out in.

A dog that has not been crated since it was little, may take some work.
Start out just putting its toys and treats in the crate.  Praise it for going
in.  Feed it in the crate.  This is also an easy way to maintain order at
feeding time for more than one dog.  

If the scary strangers happen to have a few pieces of her kibble to give her, she may decide they aren't so bad after all.  It works with most dogs, although the more food motivated, the better.  I have even carried a 35 mm film canister of it out in public when I had a puppy with fear issues.