It's really not whether you say no, it is how you say no. Three simple rules have nearly always worked for me:
Be honest.
Be direct.
Be professional.
Doesn't matter if you're simply saying no to a given opportunity or trying to convince a customer not having backups is a Really Bad Idea.
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Just my $0.02 from over here in the cheap seats of the peanut gallery - please adjust for inflation and/or your local currency.