iPhone Backup To External Drive with iTunes 11

I'm trying to backup my iPhone 5 to an External Drive since my Macbook Air does not have enough space for the backup. I'm using iTunes 11.01 and OSX 10.8.2. I've tried holding down the option key when opening itunes to create an itunes library on the external (succesfully) yet i still run into the same "not enough space" message. Any suggestions on how to change the backup location would be much appreciated.