I'm going to skip over some things, since I've already done this. 

1. First, I forked PeteWasEre's github repo for the kerbal controller. I took out all the autopilot code (not using it), and changing the formatting in the gui to confirm to my bizarre aesthetics (mm ambervision monospaced fonts).
2. My first try getting the code working, I just wanted to get a throttle working (that was hard enough). Then I set up an initial prototype box to start playing with layouts and also start figuring out how to use the multiplexer chips I would need:

I also started working on my part list, which let me plan out what components I needed to buy and (more importantly at this stage) how many digital and analog pins I would need for them. This let me figure out how many multiplexers were needed (lots).