While the backup target directory must be available to the server being backed up, it is good practice to use a target directory that is not physically mounted on the server. That way you ensure that if the server is damaged the backup directory is still available.
A separate target directory must be used for each master server being backed up. It is good practice to avoid confusion by including the master server's machine name in the target directory name. For example, the target directory for a nisbackup run on the master1 machine might be named /var/master1_bakup
Never back up more than one master server to a given target directory. Always use different target directories for different master servers. This is because each time you backup one or more NIS+ directory objects to a given target directory, previous backup files for those NIS+ directory objects in that directory are overwritten.