The free Win10 upgrade for 7 users expires this summer, so why not take advantage of the Freebie.
Ive got a couple of Machines that I cloned the HD and upgraded to win10 Pro to get them activated, then slapped the original win7 HD back in, so still running 7 Ultimate, but have the option of running 10 as and when. Once activated on 10 you can run both 7 and 10 legally on the same machine but not at the same. 
I've got a usb 1TB stand alone hardrive here Chris
I've backed up files and folders in the past but I have never tried to clone a running copy of Windows
Do I need a separate piece of software to do it all in one go ?
Hopefully i'm reading this right 
You can use windows to create a Drive Image / Restore it blah, blah, but I tend to use 3rd Party apps, theres plenty of Freebies around that do the job, HDClone, XXclone, EaseUS to name a few, there all pretty much do the same job depending how youve Partition your HD, you might even find your 1GB came with a full working copy of something.
Might seem a bit daunting at first if you not done it before, but your soon get the hang of it, just make sure you know which disk is doing what to the other one (Source, Target etc), and double check before hitting start.
Also worth checking after cloning that the Copied Disk actually Boots in your machine and works as it should before putting it in a safe place.
Edit, also worth mentioning with cloning, any data youve got on the new Target Drive will be erased, so make sure all is backed somewhere etc, also the Target drive needs to be the same size or bigger compared to the Source rive.