MacDougal, Littell Literature: "A short story is a work of fiction that can be read at one sitting. Usually it develops one primary conflict and produces a single effect. The four basic elements of a short story are its plot, characters, setting and theme. The plot is the story that unfolds as a result of a struggle between opposing forces [conflict]. The characters are the people or animals who take part in the action. The setting is the time and place in which the action occurs. An outgrowth of these three, the theme is the central idea or message conveyed by the writer."
The following template may be helpful in developing and constructing ideas for short stories:
The story is about a [description of main character] ,
who [action or predicament which initiates plot]______
but [conflict; difficulty or obstacle main character faces]____,
so [plot and resolution of conflict]__________________,
which shows ____ [theme]__________________________.
Any pre-existing conditions, i.e., anything that was true about the character before the story began (age, hometown, occupation, life history, etc.) all belongs on the first line, not the second. The second line is essentially where the story you are writing begins; the thing the character does, or the predicament in which he finds himself, which sets subsequent events in motion.
The fifth line, "so..." really should be three or four lines; this is where you basically describe what happens, including how the story ends. Some writers need to actually write the story before they decide how it's going to end; that's fine, but be sure it fits the template when it's done.
Short stories must have a singularity of purpose.
One main character
One central conflict
One setting; one place, one time
One main theme
PLOT: Should focus on the main character, and take less than one day. Plots longer than that tend to be too complex, and the writing becomes expository. Most short story plots run their course and are resolved in very little time, though they may be dependent on extensive background information.
CHARACTERS: There should be one fully-developed main character, and no more than two or three fully- or partially-developed secondary characters. It is difficult and time-consuming to develop a large cast of characters in a short piece; introducing too many people in a short space can be confusing to the reader.
SETTING: A short story should have only one setting, preferably one that exists in the real world and is familiar to both author and readers. Fantasy worlds are very difficult to establish convincingly in short fiction, and should be avoided unless thematically necessary; i.e., unless the story's fantasy elements are there to indicate something significant about the real world.
Click here for some more ideas about short stories.