For dating, I've always believed that firm honest turndown is the best policy.
For a platonic relationship, those don't normally end with a yes or no outcome as a dating scenario does. So telling a platonic would-be friend that you aren't compatible seems a little abrupt and rude. Honestly, in a case like that, if I were on the receiving end, I'd rather have them be too busy for me. It allows me to save face. And after an instance or two, I do get the hint. Unfortunately, on the doling-out end, we don't always know how the other person will take it.
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A finger in every pie.