We need to turn your bitmap image into a vector image. A bitmap image is actually a mosaic of tiny squares called pixels. While most photographs are made up of these tiny "picture elements" (pixels), for this process we need the image to be a mathematically defined shape of lines, called a vector image.
We'll be using the trace bitmap feature to trace around our image and turn it into a collection of paths.
Select your image, then click Path, Trace Bitmap...