Whenever you start an ArcMap project you should always ensure that you have established a proper working environment. Some of the aspects you should pay attention to are presented below. Here is another list of 7 ArcMap tips and tricks.

Absolute and relative paths in ArcMap

When you create an ArcMap document, you should specify that paths be stored as relative paths. To set this option, look under the File menu and click Map Document Properties. Here, you can specify whether to store absolute or relative paths.

When you save the document with relative paths, the application converts paths into paths relative to the location where you stored the document (e.g., the current directory [C:\data\]).

Setting the location for the default geodatabase

ArcMap, by default, will store any newly created files in a default geodatabase (C:\Documents and Settings\...\My Documents\ ArcGIS\Default.gdb). Since storing data in the default geodatabase location is problematic (e.g., doing so will increase the length of time it takes you to log onto the system), you should always identify an appropriate location for the geodatabase. Given the practice in most geoscience labs in the Department of Geography, the appropriate location for storing your data / creating a geodatabase is C:\data\. Thus, your first step whenever starting a project / lab is to set the default database to reside in C:\data\Labx (where x would be the lab #). So, if you will be working with a geodatabase, follow the instructions listed below:

Ensure the default geodatabase is explicitly set:

1. Click on Catalog
2. Select Folder Connections
3. Confirm that C:\data\Labx is listed as a Folder Connection
4. Right-mouse click on the appropriate .gdb
5. Click on the entry ‘Make Default Geodatabase’

It is a good idea to keep the number of connections in ArcCatalog to a minimum--every time you start ArcMap it checks the connections, and if some of them don't exist (e.g., files on a network drive that isn't currently connected) it can take some time for ArcMap to 'drop' the connection.

NOTE: If you don't explicitly set your default geodatabase to reside in (for example) your Labx folder, ArcMap will use the standard default geodatabase (stored in your documents folder) to store the output from any processing. In order to confirm where ArcMap is storing your output, you should make it a habit not to simply type in the name of your output file, but rather to click on the folder icon and confirm that ArcMap is storing the output in the appropriate folder / geodatabase.

Establishing meaningful geoprocessing parameters

In order to ensure that subsequent steps produce the correct output, and to ensure that various outputs get placed in the correct location, we should explicitly set some of the geoprocessing environment options.  To do this, click on Geoprocessing / Environments…  

• Select Workspace and ensure that the Current and Scratch Workspaces are set to the appropriate geodatabase. 
• Select Processing Extent and set the Extent to an existing layer, or explicitly set the extent to something appropriate.
• Under Raster Analysis set the Cell Size and Mask to an existing raster layer.  Click on OK.  Now, whenever a feature is converted to a raster, or a raster layer is created, its resolution (and extent) will match the existing raster file.

By default ArcMap does NOT allow you to overwrite the previous outputs of a geoprocessing operation (that is, if you have to redo a geoprocessing operation you must give the output a different name).  You can, however, override that default by clicking on Geoprocessing Options (under Geoprocessing) and then selecting ◙ Overwrite the outputs of geoprocessing operations.

You should confirm the environmental settings / geoprocessing parameters every time you start your work.

I have observed that sometime a process, such as projecting a layer, doesn't work if Background Processing has been enabled. You can disable background processing by deselecting it under Geoprocessing > Geoprocessing Options.

Directory naming conventions

It is also a highly recommended practice to not store / create ArcMap data or documents in a directory name that contains spaces (that is, it is recommended that you do not store any files in, for example, C:\Documents and Settings\...\My Documents\ even though that is where ArcMap indicates that that is where it wants to store the default geodatabase!). You should also not create files with names that begin with numbers (e.g., 123layer.shp). While it is possible to do so, and in most cases it will not create a problem, there are some known issues that arise with some components of ArcMap (and with add-on programs such as FragStats) if the directory name contains spaces / the filename begins with a number.

Show file extensions by default

It is a good practice to modify Windows Explorer so that, by default, it shows all known file extensions. To do this, click on Organize, then on Folder and search options. Then, in the View tab, uncheck Hide extensions for known file types. Doing this will make it much easier to find files.

Some general observations:

It is better to open ArcMap and then select the appropriate MXD file, rather than to double-click on the MXD file to start up ArcMap. Although in most circumstances the results will be the same, in some cases issues can arise that will subsequently result in ArcMap bombing out.

You should always work from the local (C) drive rather than from the Server (H) drive. Every connection to the Server 'adds up' and eventually the system can become very sluggish and, at the extreme, some users may find that they cannot successfully log onto the system. An example of the connections that are established by a single user shows how many connections are required by ArcMap.

Bookmarks are an efficient means of keeping your layouts consistently 'laid out'. The ArcMap help file explains how to create and manage bookmarks.

You should always follow basic design principles where creating a map (e.g., as highlighted in this ArcUser article by Aileen Buckley). In the end, maps need to follow basic design elements and be made following the principles of Gestalt.