I have a confession to make. I'm not a natural short story writer. I have to fight to keep myself from haring off after one plot thread or another. Writing short fiction is hard. So, I look for anything that helps me confine a story into the appropriate length and still have it be a story. One of the reasons we reject a submission at Flash Fiction Online http://flashfictiononline.com is that it's only a scene not a story.
So, how do you fit all the necessary story elements into 1000 words?
Writing Excuses http://writingexcuses.com did a podcast on the "Hollywood Formula" in Season 6. Lou Anders http://louanders.com visited the pod cast and talked about how his mentor, Dan Decker, divided any story into its three parts (beginning, middle, end). I recommend you check out the entire Writing Excuses podcast at http://www.writingexcuses.com/2011/10/02/writing-excuses-6-18-hollywood-formula/.
The short version of the Hollywood Formula: a story generally has three main characters and three parts. The three characters are the Protagonist, the Antagonist, and Dynamic or Relationship character. In a non-modified formula the first act takes about 1/4 of your word count, second 1/2 and the third has the final 1/4. In a Flash Fiction story that means roughly 250 words for the beginning, 500 for the middle and 250 for the ending.
Certain story benchmarks happen in each act. In the first act, you introduce the three main character and what they want. About a tenth of the way into the first act (or at about 25 -30 words), the protagonist makes the fateful decision. I think of this as the red light moment. If the protagonist says no, the story's over. Do not go past "go", do not collect $200. In Flash, you probably have until about 100 words for the protagonist to make that choice. BUT the protagonist must make a choice.
In the middle, the protagonist needs to be asking and answering questions. This section starts about 1/2 way through the first act (or 120-130 words) and ends about 1/2 way through the second act (word 500). Once the protagonist knows what the questions are, he needs to start answering them. Right about word 650 or so the protagonist hits his "low point" - the place in the story where things are at their worst and he's as far from his goal as he could be. Act II closes around word 750.
From the "low point" to the end is the final battle. In this act, the protagonist must defeat his antagonist, obtain his goal, and reconcile with the relationship character. The closer these events happen to each other, the more emotional impact your story will have.
But wait, you say, my short story only has two characters, does that mean I need to add someone else?
No. The three act pattern should get modified based on your story. Some stories are all about the final battle. Some are all about asking and answering questions. But, a story needs to include all these elements. Stories that fall flat are missing part of the formula. If you can't find these elements, you might have a scene, not a story. Now you know why short stories, and flash fiction in particular, are so hard to write. But you can do it. I know you can.