Writing, a semi-failure

I finished my story for the Fencon writers' workshop. Alas, it's not something I can be proud of. I tried to write an original story, and as always, even when trimmed to the minimum, it was 3 times as long as the word quota (the magical 5000 words). So instead I dusted off one of my older stories that could be easily chopped down to 5000 words, and submitted it. This is so dispiriting. I wonder if I'll ever be able to write a story that fits the guidelines (well, obviously, I did that a few times in the past, but I'm afraid it's not reproducible). I'm going to try now to expand my latest story into a full-blown novel (or at least a novella), filling it in with more characterization (ha! who am I kidding?) and more worldbuilding, and then see if I could take just one episode and make a story out of it. The problem is that a story must stand on it own: it should not require additional background, and it should achieve resolution in the end -- and I'm not sure that's possible to do within the setting I'm writing about. What a conundrum.