An outline has several uses:
It can give you an overview of the whole story -- which helps you look for holes, inconsistencies, flat spots.
It can help you estimate how big the story will be.
It can let you play with the story design more efficiently than if you have it written out in manuscript.
You can show it to fellow writers and they'll be able to read/critique it more easily and quickly than if you show them manuscript.
I have two separate outlining methods: a plot-level method, and a character-level method. I find it useful to start with the second one and then gradually move to the first. So here's a recipe for character-level outlining...
- Identify the major characters in your story. (These are the characters that face major challenges, conflicts and the prospect of change.). Make sure that you understand them physically, socially, psychologically before you proceed.
- Pick a character. Find the event that first changes its life and gets it involved in the story. Start your outline here. Summarise the event, how the character feels, what the character believes, wants and how it reacts.
- Pick the next event that changes what the character wants, believes, or has a major impact on how it feels about itself. Summarise the event and any changes to the character, its goals and methods. Summarise too anything the character has achieved of its earlier goal in the meantime.
- Continue until whatever first provoked the character to get involved in the story is now discharged. It's either gotten what it wanted or changed so that it no longer wants that.
- Pick another major character and repeat
This method produces some sort of step-plan -- one for each character. Typically a major character might go through five to ten major changes in a novel, and perhaps two or three in a short. You might have two or three major characters in a short, and maybe two to eight in a novel. You can produce a sort of chart with the characters in columns. You can begin to see how causes and effects might link between each character, so you can line related related events up in rows. Some rows might have only one event. Some might have several.
This step-plan lets you see whether the character changes are credible, interesting, contain the right sorts of contrasts. Once you have that you can do an outline for your plot.
My favourite plot outline is a scene-level outline. I write a few lines per scene. It's a summary of location/stimulus/response/outcome for each of the major characters in the scene, e.g.
...
3. Sneaking out of home at night to meet his girlfriend, Bob is spotted by his sister Cherie and offers her a bribe to keep her from telling. Realising that Bob is serious about Gloria, Cherie finds an opportunity to make mischief.
4. When Gloria doesn't show at their meeting-place beneath the bridge, Bob returns home worried. The next day at school he faces an angry Gloria who demands to know why Bob wanted to meet at the dump instead. Unable to explain, Bob finds himself dumped.
5. At home, an angry and depressed Bob confronts Cherie, who confesses to having swapped SIM-cards in Bob's cellphone so she could text Gloria. He demands that she confess to Gloria, and Cherie reluctantly agrees. But when they go around to Gloria's place, Bob finds that she never returned home from school.
...
It's important that each scene outline contains location, emotion, motive, the stimulus that created that motive, a goal and an outcome. It's also important that every stimulus arises from something that has happened in a previous scene.
Often a single entry in the step-plan may unpack to several scenes. A novel might have 70+ scenes; a short might have 1-12
Hope that helps.