correct sequence to update firmware steps

I know that this must have been asked a million times before, but.....

my R7000 is running DD-WRT v24 sp2 07/01/15 std (very successfully since install)

I want to upgrade to the latest version dd-wrt v24-K3_AC_arm _std

I am a little confused by the sequence of steps that I have to take. 

Do I reset the router to factory defaults and then update the bios or the other way round?

And how do I retain all my settings, like VPN and assigned IPs etc. There are heaps of them and I would hate to have to do them all again. And if so, how do I save my current settings so that I can re-enter them?

Sorry if this sounds a stupid question, but I am scared to screw things up.

Cheers