It is recommended that you should run at least 2 or more successful test migrations before running a live migration. The following steps describe the process of setting up a test environment for migration:
Back up your CRM 3 existing environment including customizations, custom codes, sitemap...
Configure a new environment with SQL Server and all necessary components (Do not install CRM yet!)
Restore database that you have backup from existing environment to the new environment
Redeploy CRM to the new environment
Test to see if the new environment works as expected
Upgrade the new environment to CRM 4
Test the new environment after upgrading